The OCR remained unchanged mid-February which is what was expected by the wider market.

The rationale was that low interest rates needed to be maintained to keep inflation and employment close to their mandated targets.

While it is still possible that we may see reductions in 2020, the fact things were unchanged meant that the mortgage market remained relatively stable as far as interest rates are concerned for borrowers. The one standout was the HSBC offer which came out at 3.20% for two years – this is definitely an exciting rate and a step in the right direction for borrowers, but as rates continue to trend down one of the major questions is: what happens to depositors?

The 3.20% rate isn’t the lowest two-year we’ve seen, as we note Bank of China had a two-year rate at 3.15% (both one and two years in fact) in 2019, however HSBC still do remain competitive across all rate terms – particularly with their five-year rate at 3.89%.

From a borrowing perspective it would be good to see other main banks (New Zealand and Australian banks) follow these rate drops, but with increased capital requirements particularly on Australian lenders (our “big four”), I’m not sure how much of this we will see – as deposits are definitely something they need to be attracting in coming years.

The key events to look out for will likely be in May, with the Official Cash Rate, Monetary Policy and the Financial Stability report all coming out.

Owner-Occupier And Investor Rates Align

Rates still seem to be reasonably steady with some lenders earlier this year (like BNZ) aligning their owner-occupied and residential investor pricing rates. As you may be aware some lenders margin for investment loans (higher than owner-occupied property rates) and others don’t – so be aware of these changes if you’re wondering why your bank may be different in this space and not perhaps offering you rates as sharp as what you’re seeing out there.

As a borrower, you’re wanting to look at your own position and see if it is worthwhile breaking and re-fixing some of your mortgages in this low interest rate environment, to take advantage of what is around.