“You can’t see perfectly into the future. You know that there will be these lags and you’re not going to get a perfect indicator. No one rings a bell and says: ‘Yep, now’s the time.’ That’s a judgement that needs to be made.”
Hawkesby says that it’s still too early to announce victory against inflation and change course, but there promising international signs that we may have reached a peak.
So how much higher could mortgage rates possibly go in New Zealand?
“With the exception of the cyclone… the economy has largely evolved as we were anticipating,” says Hawkesby.
“We signalled back in November that the OCR might get up to around 5.5 per cent this, and that story continues largely the same. It’s something that was signalled really well to financial markets, so wholesale interest rates had already moved. And when we made our decision this week, those mortgage rates largely stayed where they are.”
Looking at those wholesale mortgage rates that are paid by homeowners, Hawkesby anticipates that they are likely to stay at around 6.5 per cent for a two- to three-year fixed mortgage for “some time yet”.
This is lower than the fears that homeowners could be looking at rates as high as 8 per cent, but the economic situation around the world remains quite uncertain at the moment.
Listen to the full podcast of On the Tiles to hear who will be worst affected by these mortgage rates, why the rental market will likely also go up, and why savers stand to benefit from these circumstances.
On the Tiles is available on iHeartRadio, Apple Podcasts, Spotify or wherever you get your podcasts. New episodes are available on Fridays.
