Interest Rate Hike

There will be an interest – and mortgage – rate hike in the near future, say economists. They just cannot agree when.

The central bank has warned they will start increasing the OCR sooner than expected. It is currently 2.5% and the next review takes place on Thursday.

The predictions of 13 economists in the latest mortgagerates.co.nz survey varied widely.

• increase in December 2011....8 of 13
• increase in October 2011........2 of 13
• increase in Quarter 1, 2012....3 of 13

The eight predicting a December OCR increase differed on the amount. Three forecasted it would rise to 2.75%, five to 3%.

Mortgagerates.co.nz publisher Philip Macalister says the wide variation in predictions, including the size and timing of the next OCR increase, shows that there is still a lot of uncertainly in the market.

"One thing that is certain is that as soon as the OCR increases floating rates will rise."

Rate comparison
Public Trust – 5.6% (floating)

SBS – 5.65% (floating)

HBS Bank – 5.65% (floating)

BNZ – 5.50% (offset mortgage)

Kiwibank – 5.59% (offset mortgage)

Westpac – 5.6% (revolving credit) or 6.24% (floating)

Charlotte Woodfield National Business Review