1 00:00:00,360 --> 00:00:02,920 Speaker 1: Bryan Bridge your news talk ZB and we will be 2 00:00:02,920 --> 00:00:04,800 Speaker 1: speaking to Milford actually in just a few moments to 3 00:00:04,800 --> 00:00:07,440 Speaker 1: get a market update right now, though the banks have 4 00:00:07,560 --> 00:00:10,799 Speaker 1: followed Adrian Or and they are cutting mortgage interest rates 5 00:00:10,840 --> 00:00:13,480 Speaker 1: after the OCR decision this afternoon, am Z it's two 6 00:00:13,520 --> 00:00:16,680 Speaker 1: year rate is down below the five percent mark to 7 00:00:16,760 --> 00:00:20,239 Speaker 1: four night, I mean barely four nine to nine. But 8 00:00:20,320 --> 00:00:22,280 Speaker 1: it is of course bad news for sabers. Term deposit 9 00:00:22,360 --> 00:00:24,360 Speaker 1: rates have been cut to Jane Tips Training is The 10 00:00:24,360 --> 00:00:27,120 Speaker 1: Herald's Willington business editor. She's with us tonight. Hi Jane, 11 00:00:27,440 --> 00:00:29,640 Speaker 1: Hi Ryan. Now, I saw your question and I thought, 12 00:00:29,640 --> 00:00:32,560 Speaker 1: great question to the Reserve Bank today at the press 13 00:00:32,760 --> 00:00:36,360 Speaker 1: about the longer term rates your two to five years. 14 00:00:36,400 --> 00:00:37,840 Speaker 1: What can we expect to see there? 15 00:00:38,680 --> 00:00:44,280 Speaker 2: That's right. Assistant Governor Karen Silk basically tempered people's expectations 16 00:00:44,360 --> 00:00:47,800 Speaker 2: around those longer term rates coming down. She made the 17 00:00:47,840 --> 00:00:52,120 Speaker 2: point that, yes, the OCI has a more direct impact 18 00:00:52,159 --> 00:00:55,000 Speaker 2: on floating rates and on shorter term rates, but when 19 00:00:55,080 --> 00:00:59,160 Speaker 2: it comes to those two, three, four, five year mortgage rates, 20 00:00:59,520 --> 00:01:03,840 Speaker 2: those are affected by a range of international factors that 21 00:01:03,880 --> 00:01:07,160 Speaker 2: are beyond the Reserve banks control. So the thing is 22 00:01:07,160 --> 00:01:09,160 Speaker 2: is that at the moment. Some of those factors are 23 00:01:09,160 --> 00:01:12,199 Speaker 2: putting quite a bit of upward pressure on interest rates. 24 00:01:12,440 --> 00:01:16,200 Speaker 2: So if you are floating or fixing for a short term, 25 00:01:16,440 --> 00:01:18,680 Speaker 2: those rates will keep coming down a bit. But if 26 00:01:18,720 --> 00:01:22,200 Speaker 2: you're looking to fix longer term, we might not see 27 00:01:22,680 --> 00:01:25,880 Speaker 2: mortgage rates come down too much. Now, some of those 28 00:01:25,880 --> 00:01:29,680 Speaker 2: factors that are pushing up those rates are the fact 29 00:01:29,680 --> 00:01:34,120 Speaker 2: that investors around the world are worried about Donald Trump's 30 00:01:34,120 --> 00:01:38,440 Speaker 2: policies being inflationary, so federal reserve interest rates that the 31 00:01:38,480 --> 00:01:43,119 Speaker 2: Federal Reserve not cutting rates are as quickly, also worried 32 00:01:43,120 --> 00:01:47,680 Speaker 2: about geopolitical risks, and worried about the US, the finances 33 00:01:47,680 --> 00:01:51,520 Speaker 2: in the US and the government's fiscal deficit. So those 34 00:01:51,560 --> 00:01:55,440 Speaker 2: factors are making it more expensive for banks to borrow, 35 00:01:55,480 --> 00:01:58,840 Speaker 2: and that does affect people looking to fix the mortgages 36 00:01:59,040 --> 00:01:59,800 Speaker 2: for longer terms. 37 00:02:00,040 --> 00:02:03,960 Speaker 1: We're getting punched in the head twice, isn't it. You know, Well, 38 00:02:04,000 --> 00:02:06,440 Speaker 1: finally we get some relief, but oh no, actually we've 39 00:02:06,440 --> 00:02:08,840 Speaker 1: got Trumps, So those longer term rates aren't going to 40 00:02:08,840 --> 00:02:10,280 Speaker 1: be as attractive as we would have hoped. 41 00:02:10,880 --> 00:02:13,919 Speaker 2: I know, it's it's really it's really one thing after 42 00:02:13,960 --> 00:02:17,240 Speaker 2: the next, and yeah, and you know, The Reserve Bank 43 00:02:17,280 --> 00:02:19,000 Speaker 2: did share a bit of data on that. They said 44 00:02:19,000 --> 00:02:22,320 Speaker 2: that currently the average interest rate that banks receive on 45 00:02:22,360 --> 00:02:25,880 Speaker 2: all their mortgages is about six point two percent. By December, 46 00:02:26,360 --> 00:02:29,200 Speaker 2: they reckon it'll only get to five point seven percent. 47 00:02:29,639 --> 00:02:33,760 Speaker 2: So while, you know, while we'll start to feel those 48 00:02:33,960 --> 00:02:37,560 Speaker 2: lower interest rates quite soon, the overall impact is not 49 00:02:37,600 --> 00:02:40,040 Speaker 2: going to be big. Like, if the average interest rate 50 00:02:40,080 --> 00:02:42,440 Speaker 2: that banks are receiving is only five point seven percent 51 00:02:43,200 --> 00:02:47,760 Speaker 2: by December, you know that shows that the rates will 52 00:02:47,840 --> 00:02:50,520 Speaker 2: you know, stay stay a wee bit elevated. Five point 53 00:02:50,600 --> 00:02:52,480 Speaker 2: seven percent is the level that it was at in 54 00:02:52,560 --> 00:02:53,560 Speaker 2: late twenty twenty three. 55 00:02:53,680 --> 00:02:57,359 Speaker 1: Wow, that is a really interesting stat Were you surprised 56 00:02:57,520 --> 00:03:01,720 Speaker 1: the rbn Z still very firm on seventy five basis 57 00:03:01,720 --> 00:03:02,800 Speaker 1: point cuts this year? 58 00:03:04,720 --> 00:03:08,520 Speaker 2: Yeah, that it was a little bit more dubbish than 59 00:03:08,560 --> 00:03:12,960 Speaker 2: it was in November. I think the bank is worried 60 00:03:13,000 --> 00:03:16,000 Speaker 2: about the effect that tariffs and some of this sture 61 00:03:16,000 --> 00:03:21,040 Speaker 2: of political instability will have on GDP growth. It didn't 62 00:03:21,200 --> 00:03:23,720 Speaker 2: interestingly take a view on that the impact tariffs would 63 00:03:23,720 --> 00:03:25,760 Speaker 2: have on inflation. That was something I was looking out for, 64 00:03:25,800 --> 00:03:27,840 Speaker 2: but it said that we don't really know, and there 65 00:03:27,840 --> 00:03:31,160 Speaker 2: are quite a few moving parts there. Something else that 66 00:03:31,160 --> 00:03:34,360 Speaker 2: people will be interested in is it's doesn't think house 67 00:03:34,400 --> 00:03:37,400 Speaker 2: price growth will recover too much, so it actually thinks 68 00:03:37,440 --> 00:03:41,200 Speaker 2: house prices annually will will keep falling at the start 69 00:03:41,240 --> 00:03:44,960 Speaker 2: of this year and then sort of return to single 70 00:03:45,000 --> 00:03:48,600 Speaker 2: digit growth. So it doesn't believe that lower interest rates 71 00:03:48,640 --> 00:03:51,240 Speaker 2: will see house prices take off anywhere close to the 72 00:03:51,240 --> 00:03:53,080 Speaker 2: way they took off during the pandemic. 73 00:03:53,160 --> 00:03:55,080 Speaker 1: Interesting stuff, jan I think he was always to know. 74 00:03:55,200 --> 00:03:56,960 Speaker 1: Gyp show any with us on the hero of bealings 75 00:03:57,000 --> 00:04:00,320 Speaker 1: and business editor who has all the good numbers? More 76 00:04:00,360 --> 00:04:03,640 Speaker 1: from Hither Duplessy Allen Drive. Listen live to news talks 77 00:04:03,680 --> 00:04:06,840 Speaker 1: it'd be from four pm weekdays, or follow the podcast 78 00:04:06,960 --> 00:04:07,960 Speaker 1: on iHeartRadio.