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Speaker 1: It is seven after six news talks. It'd been Liam

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Speaker 1: dan shortly on the bond markets that made Trump blink,

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Speaker 1: Jamie McKay on the beef prices holding up in the US,

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Speaker 1: Sam Dickey on how to invest in the volatile world.

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Speaker 1: And we'll get to Entebrady in the UK before seven too.

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Speaker 1: Right now, the ocr dropped. We all saw that yesterday,

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Speaker 1: But why haven't your mortgage rates joined them? Even for

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Speaker 1: those of you on a floating rate, which many people

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Speaker 1: still are holding up for a lower one, you'll yet

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Speaker 1: to see the savings materialize. And I know what you're thinking.

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Speaker 1: You're thinking, hang on, I saw the banks drop. Some

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Speaker 1: of the banks drop the rates yesterday. Yes you did,

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Speaker 1: but they dropped their advertised rates, not the effect of

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Speaker 1: rates that takes longer. A and Z and bn Z

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Speaker 1: interestock code do onions did some good work on this.

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Speaker 1: Am Z and bn ZI the fastest to give you

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Speaker 1: your savings about seven days, while kiwibank tacks an average

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Speaker 1: of two weeks to pass along the cut. Kent Dustin

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Speaker 1: started the banking reform coalition. He's with me tonight, Hi Kent?

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Speaker 2: Sure here are you going? Yeah? Good?

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Speaker 1: Thank you? Thanks for being with me. So you don't

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Speaker 1: like the time it takes for the banks to pass

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Speaker 1: on the cuts from the OCR. How how long do

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Speaker 1: you think it should take?

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Speaker 2: Well, you know it's not just me, right, I don't

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Speaker 2: think anyone likes the amount of time takes for the

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Speaker 2: banks to pass on the OCR cuts because you know,

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Speaker 2: after all, it's no harder than just hitting the heading

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Speaker 2: the return key on the keyboard. And really, there's no

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Speaker 2: reason why it should not happen on the exact same

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Speaker 2: day that the Reserve Bank lowers the OCR. You can't

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Speaker 2: see any reason at all why why it takes weeks

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Speaker 2: and weeks to do this.

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Speaker 1: Look, I agree with you in principle, and there's that

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Speaker 1: they've given a whole bit of The banks have given

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Speaker 1: a whole bunch of reasons why it takes them so long.

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Speaker 1: But there's one thing. If you look at the rate

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Speaker 1: at which they drop after there's a cut versus the

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Speaker 1: rate at which they increase after there's a hike, they're

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Speaker 1: about the same. In fact, they're actually faster, asb for example,

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Speaker 1: drop the rates faster than they raise them.

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Speaker 2: Yeah, it's kind of interesting because you know, it does

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Speaker 2: look like the banks are cherry picking a bit of

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Speaker 2: data on this In the Commerce Commissions Market study into

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Speaker 2: personal banking last year they commissioned a piece of work

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Speaker 2: from the University of Auckland's Business School and it looked

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Speaker 2: at the long run data and what it said after

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Speaker 2: they did the big statistical analysis, you know, completely independent

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Speaker 2: of the banks themselves, is that after four months, because

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Speaker 2: you've got to take into account both the fixed rates

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Speaker 2: and the floating rates. Right after four months, the banks

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Speaker 2: had passed on ninety percent of the increase to borrowers,

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Speaker 2: but they only passed on fifty seven percent of the decrease, right,

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Speaker 2: So I think there was a long run behavior here

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Speaker 2: from the banks that they are literally you know, rockets

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Speaker 2: up but feathers down. And I think we see that

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Speaker 2: when you know, we're talking about weeks and weeks to

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Speaker 2: get what should be a pretty simple change through to

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Speaker 2: existing borrowers, but you're.

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Speaker 1: Talking about the amount we were talking about the time,

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Speaker 1: so on the time, I mean, if they are dropping

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Speaker 1: rates at the same or faster rate than they are

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Speaker 1: raising them, does that not tell you something? Does that

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Speaker 1: not tell you that you know, maybe it is that

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Speaker 1: their IT systems are crap, or I don't know, something's

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Speaker 1: going on behind the scenes, or as they say, they

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Speaker 1: have to do due diligence, and there's a whole bunch

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Speaker 1: of other things they need to take into account. Would

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Speaker 1: that number not indicate that perhaps they're just slow, not bad.

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Speaker 2: Well, you know, it's a bit hard to untangle slow

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Speaker 2: from bad, you know, because after all, look, no one's

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Speaker 2: arguing that their IT systems are terrible. Right. In that

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Speaker 2: same market study the Communce Commission, you know, they pointed

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Speaker 2: out that the ANZ Bank their core systems had been

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Speaker 2: depreciated all the way down to zero dollars, which means

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Speaker 2: they're so old that in both accounting terms and operational terms,

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Speaker 2: those systems are worthless. Right, So, yeah, their systems are bad,

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Speaker 2: but that's their own decision to have not reinvested in

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Speaker 2: up to date systems. So it's not like borrowers should

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Speaker 2: have to pay a penalty for that. In when it

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Speaker 2: comes to the timing of the delays, again, the banks

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Speaker 2: are fully in charge of this. You know, They're the

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Speaker 2: ones who decide the notice periods and the contracts, and

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Speaker 2: you know how it gets operationalized in their systems, and

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Speaker 2: how quickly they notify borrowers and all those things, and

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Speaker 2: It just seems that these delays are pretty self serving

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Speaker 2: because it's pretty obvious that holding interest rates too high

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Speaker 2: for too long costs us money and makes them profit.

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Speaker 1: Kent thanks to that Kent dustin Banking Reform Coalition convena

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Speaker 1: with us not happy with how long it takes. But

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Speaker 1: I mean not that I'm here to stick up for

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Speaker 1: the banks, because no one wants to be that guy.

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Speaker 1: But they do take into account a whole bunch of

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Speaker 1: different numbers when they're deciding what their rates are going

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Speaker 1: to be, including swap rates, which have been all over

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Speaker 1: the place over the last week. So I wouldn't you

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Speaker 1: give a bit of leeway. Plus some of their according

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Speaker 1: to the Banking Inquiry, computer systems are so antiquated that

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Speaker 1: even passing the rates on for you know, if you're

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Speaker 1: wanting to lower the rate for US safe, which is

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Speaker 1: to their advantage, they can't do that until the first

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Speaker 1: of the following month. That's how ms dos their computer

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Speaker 1: systems are, so it might be, as I say, more

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Speaker 1: slow than bad.

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Speaker 2: For more from Heather Duplessy Allen Drive.

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Speaker 1: Listen live to news talks.

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