Kiwibank CEO says no decisions yet, but it "looks like" fixed-term rates will come down a bit in next 7-10 days

[kendrac]

An interesting interview on the AM show from Kiwibank CEO.

Discussion starts about 1min in. He talks about swap rates coming down around 0.3 after the announcement on Wednesday, which is a big move in a day. The decisions haven't been made yet, but he is expecting some of this will get passed on to customers.

Sounds like the rates might only come down a tiny bit if they do (say 0.2-0.3), but could be useful info for anyone who is renewing in the next week or so.

 

[blueangelspirit]

@kendrac That’d be nice but a lot depends on inflation and what the US does with their rates.

If the Fed goes to 6% we’ll go higher as NZ banks will need to provide a premium to get overseas funding.

 

[seanch]

@blueangelspirit The US CPI dropped to 4.9%, which is the lowest it's been in 2 years, so it seems unlikely that they'd have any extreme rate increases.

 

[blueangelspirit]

@seanch Yep, that’s good.

I’m just weary of Jerome Powell talking a lot about “stubborn inflation” and how it could be quite difficult to get back down to 2% target.

"Although inflation has been moderating in recent months, the process of getting inflation back down to 2% has a long way to go and is likely to be bumpy”

 

[pmjordan]

@kendrac Coming from the US where you can fix rates for 30 years it still boggles my mind that you have to play this game every few years or so of “will I be able to afford my house”

 

[jemgirl81]

@pmjordan And when you sign up they “stress test”. But the number they test to isn’t fixed to your loan and could go well beyond that.

Like what’s the point.

 

[twentyhawks]

@kendrac Thanks for posting this OP. Good on the kiwibank ceo for fronting up.

 

[lovinganimals]

@kendrac Longer term fixed rates for anyone thinking 12 month rates will drop

 

[kendrac]

@lovinganimals By longer-term, it sounds like he might be talking about everything but the floating rate, which matches up with how the 1year swap dropped by around 0.3 too. Off work today so double checked what they said:

Host: "If you were to move them, would you be moving them up?"

CEO: "The floating rates particularly impacted by the 25 points going up, but as you look to the 1, 2, 3, 4, 5 sort-of rates, that money that we use to on lend to people, those rates dropped quite sharply in the next couple days, so... actually this morning's probably a little bit early to answer that, but certainly looks like longer term rates are coming down."

Host: "OK, so we would expect, perhaps in the next 10 days, we'd probably see a lot of the banks with those longer term rates coming down, the 1, 2, 3, 5..."

CEO: "Yeah, I mean the overnight rate for that 2 and 3 and 4 year money dropped down by 0.3 percent, which is a big move in a day..."

 

[in_jesus_i_trust]

@lovinganimals The 1 yr swap rate also dropped by 0.3%, the 1yr rates were baking in an expected rise to somewhere closer to 6% OCR but RBNZ outlook is that this is the highest it will go.

 

[lovinganimals]

@in_jesus_i_trust Don’t get me wrong, I’d love to see the banks pass on the full 30bps (and they should) just don’t think the 1 year would see more than a token 5/10bps max, they are more likely to pass on more on the longer dated terms

 

[in_jesus_i_trust]

@lovinganimals I guess we'll find out in the next couple of weeks.

 

[benedict87]

@kendrac I find it weird they don’t publish or actively say what the current inflation rate is at each ocr review