7 Nov 2016

Homeowners may face higher mortgage rates, despite predicted OCR cut

10:03 am on 7 November 2016

Homeowners are bracing for higher fixed-term mortgage rates, despite a predicted cut to the official cash rate.

The Reserve Bank of New Zealand

The Reserve Bank of New Zealand Photo: RNZ / Alexander Robertson

The Reserve Bank is due to make its last monetary statement of the year, and it is widely expected to cut the official cash rate to a record low 1.75 percent.

Despite this, ASB has increased its three-year and five-year standard rates by 0.2 percent and other banks are expected to follow suit.

ANZ chief economist Cameron Bagrie told Morning Report the higher rates were due to a rise in global interest rates and banks' need for more deposits.

"What we've seen is that the inflation profile of a lot of countries around the globe has started to pick up over the last two to three months. To be fair, a lot of that has been driven by oil prices, but that's really been enough to tip long-term interest rates off their lows."

Mr Bagrie said savers were likely to benefit from higher interest rates on deposits.

But he doubted it was a long-term trend, and said fixed-term mortgage rates may nudge back down.