The Reserve Bank's decision to raise the Official Cash Rate by 25 basis points to 2.75 per cent is the first of what economists tip will be a series of rate rises.
The rise - announced by Reserve Bank Governor Alan Bollard - is tipped to lift the cost of
a $200,000 floating mortgage rate by about $10 per week.
But as of last night the major banks had made no decision on when or by how much their floating rates would change. These decisions may not be made until early next week, one bank spokesman said.
Currently the floating mortgage rates offered by the major banks range between 5.65 and 5.99 per cent.
Reserve Bank figures show that in April this year 44 per cent of all New Zealand residential mortgages were on a floating rate, at a total value of around $87.4 billion.
Yesterday's increase is the first rise in official rates since July 2007, when they were raised to 8.25 per cent. Since April last year the OCR has sat at a record low of 2.5 per cent.
Dr Bollard said that economic growth of around 3.5 per cent was expected this year and next.
Council of Trade Unions economist Bill Rosenberg said the 90-day bank bill interest rates were predicted to increase to 4.2 per cent in March 2011, and to 5.6 per cent in March 2012. These predicted rises will further increase the cost of mortgages.
Even though the OCR is still relatively low, Retirement Commissioner Diana Crossan is encouraging home owners to start revising budgets to prepare for further changes over the next six months.
"On the positive side, there are tax cuts coming in October. But mortgage rates are likely to rise after [yesterday's] OCR increase to 2.75 per cent, and some are predicting further rate rises from the Reserve Bank later this year. Added to that is the uncertain impact of the Emissions Trading Scheme on prices from July 1, and the 2.5 per cent GST increase in October."
FLOW-ON EFFECTS
* OCR raised from 2.5 per cent to 2.75 per cent
* $200,000 floating mortgage tipped to rise by $10 a week
* Banks not saying when or how much rise will be
CURRENT FLOATING MORTGAGE RATES:
* ANZ 5.69 per cent
* ASB 5.75 per cent
* BNZ 5.99 per cent
* KiwiBank 5.65 per cent
* National 5.75 per cent
* TSB 5.99 per cent
* Westpac 5.65 per cent
Experts predict more rate rises
Photo / Bay of Plenty Times
The Reserve Bank's decision to raise the Official Cash Rate by 25 basis points to 2.75 per cent is the first of what economists tip will be a series of rate rises.
The rise - announced by Reserve Bank Governor Alan Bollard - is tipped to lift the cost of
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