KEY POINTS:
The troubles faced by US mortgage giants Freddie Mac and Fannie Mae have shown the US credit crisis, which has decimated the New Zealand sharemarket and pushed local mortgage rates higher, is far from over.
The two US mortgage finance lynchpins' share price collapse, along with the failure of lender Indymac over the last week, has dashed hopes that the near collapse of investment bank Bear Stearns in March marked the low point of the credit crisis.
KPMG financial services chairman Andrew Dinsdale said the latest US woes indicated the crisis had much further to run and the cost of funds for local banks on international markets was likely to continue to rise.
"People are going to end up paying more, and what the Reserve Bank does with the OCR [Official Cash Rate] is not going to make one iota of difference to the cost of their mortgage because the cost of international funds is going to be, without a doubt, more expensive."
Graham Hodges, chief executive of ANZ National, said the renewed credit crunch concerns had resulted in rising wholesale interest rates on international markets, which had yet to be fully passed on local home buyers and other borrowers.
Hodges told website interest.co.nz that New Zealand mortgage and deposit rates were unlikely to fall in the next couple of months given the current tensions on money markets.
ANZ National raised US$2 billion ($2.5 billion) in a five-year bond sale in the US to international investors last week.
The Reserve Bank, while conceding it will cost them more, has instructed big local banks to increase the maturity profile of their overseas funding to buttress them against money market volatility.
ANZ National has said it it is paying 2.4 percentage points over the local 5 year bank bills swaps rate for the money it raised last week, suggesting it is paying 9.75 per cent.
ANZ's current five-year fixed mortgage rate is 9.1 per cent. Hodges said: "I wouldn't say we were happy [with the price] but that's where the market is at present, and we were pleased to get a deal done when there are others who can't get issues away."
