November 28, 2024 • 3 mins
The Reserve Bank moved to cut the OCR by 50 basis points in its final decision for 2024.
New Zealand's biggest banks have adjusted their floating rates accordingly - but no significant cuts have been reported yet.
NZ Herald business editor at large Liam Dann explains further.
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Speaker 1 (00:00):
And everyone is very excited as we know about the
Reserve Bank cutting the OCR but other banks passing it on.
Liam dan As the Herald's Business, the editor at large,
it's been taking a look at it, ALM, did I Heather?
So they passed it all on?
Speaker 2 (00:11):
Or what? I haven't seen anything today. I mean, look,
A and Z went early with a bit of a
cut to fixed interest rates on Tuesday night, and I've
seen the banks. Now the banks more or less match that,
but that's like twenty basis points and it was before
the actual ocer cut. They passed on the floating rates.
(00:32):
So and you get all the press releases about that
on the minute in fact that you know, they were
arriving before we'd even received the news just about But yeah, look,
I know we're sort of thinking we're gonna get Nicola
Willis's words relief for regular Kiwi mortgage holders and all
that sort of stuff, but not March, and not unless
(00:52):
there's a bit of competition brewing. It looks like they've
sort of all stared at each other and said, are
you going to cut them? And it's like, well maybe.
Speaker 1 (01:00):
But how much it was already priced in and had
been cut in advance.
Speaker 2 (01:04):
Well, that twenty basis points is about as good as
it's going to get.
Speaker 1 (01:08):
I guess, right, is that the twenty basis points, Like,
have you measured from the last OCR cuts to this
OCR cup That whole duration is only twenty basis points.
Speaker 2 (01:16):
They did well, They passed through the full fifty pretty
well on the last one. And then I mean, yeah, look,
there are reasons that they will look to their overseas
borrowing costs having gone up because everybody's worried about you know,
what Donald Trump might do to inflation in the US,
and so the bond yields are all up over there,
so that's lifted the borrowing costs. And yeah, I guess
(01:39):
the wholesale markets price a bit in, But then you
know it's still it does still come back to competition.
If you had, you know, a keen bank ready to
grab a bit more competition, they might go and if
one of them goes, and look, it could still happen.
It's only been just over twenty four hours. But I
just feel like if you were sitting there waiting, you know,
(02:00):
to to cash in on the on the big great cut,
you know, fifty basis points is a double not much
there for you.
Speaker 1 (02:08):
So what's going on? Is it just because they don't
have to or is there something else that's playing into this.
Speaker 2 (02:13):
Well, I think it's a combination. So I don't want
to put it all on the banks. But because because
there are those international forces, they did all see it coming.
So we got out to any basis points, I guess,
starting on the Tuesday, and then then quietly sort of
and I'm sort of talking about the one year, one
year sort of fixed rate roughly, you know, one to
(02:33):
two year fixed rates, where a lot of Kiwis are
Kiwi's are really more six months and a year at
the moment because they've stayed short because they're expecting to
see it come down. But you know, Adrian Ows warned unfortunately,
unless we see a change in the sort of the
global outlook, and you know, he does say, look, it'll
be nice if the banks were repaired to pass on
(02:54):
a bit of the margin. At this point, the margins
are still higher than the average pre COVID. But unless
we see that, you know, it's going to take some
quite big cuts, and they're talking about going down to
three with the ocr but it's not going to pass through.
That's another you know, one point two five percent, but
really it's not going to be that big a pass through,
(03:14):
so that sort of creates a bit of problems, a
bit of a headwind for that interest rate lead recovery.
I guess.
Speaker 1 (03:19):
Yeah, interesting stuff. Hey, thank you very much. I really
appreciate that. Lim. That's Liam Dan, the Herald's Business editor
at large.
Speaker 2 (03:25):
For more from Heather Duplessy Allen Drive, listen live to
news talks that'd be from four pm weekdays, or follow
the podcast on iHeartRadio.
And everyone is very excited as we know about the
Reserve Bank cutting the OCR but other banks passing it on.
Liam dan As the Herald's Business, the editor at large,
it's been taking a look at it, ALM, did I Heather?
So they passed it all on?
Speaker 2 (00:11):
Or what? I haven't seen anything today. I mean, look,
A and Z went early with a bit of a
cut to fixed interest rates on Tuesday night, and I've
seen the banks. Now the banks more or less match that,
but that's like twenty basis points and it was before
the actual ocer cut. They passed on the floating rates.
(00:32):
So and you get all the press releases about that
on the minute in fact that you know, they were
arriving before we'd even received the news just about But yeah, look,
I know we're sort of thinking we're gonna get Nicola
Willis's words relief for regular Kiwi mortgage holders and all
that sort of stuff, but not March, and not unless
(00:52):
there's a bit of competition brewing. It looks like they've
sort of all stared at each other and said, are
you going to cut them? And it's like, well maybe.
Speaker 1 (01:00):
But how much it was already priced in and had
been cut in advance.
Speaker 2 (01:04):
Well, that twenty basis points is about as good as
it's going to get.
Speaker 1 (01:08):
I guess, right, is that the twenty basis points, Like,
have you measured from the last OCR cuts to this
OCR cup That whole duration is only twenty basis points.
Speaker 2 (01:16):
They did well, They passed through the full fifty pretty
well on the last one. And then I mean, yeah, look,
there are reasons that they will look to their overseas
borrowing costs having gone up because everybody's worried about you know,
what Donald Trump might do to inflation in the US,
and so the bond yields are all up over there,
so that's lifted the borrowing costs. And yeah, I guess
(01:39):
the wholesale markets price a bit in, But then you
know it's still it does still come back to competition.
If you had, you know, a keen bank ready to
grab a bit more competition, they might go and if
one of them goes, and look, it could still happen.
It's only been just over twenty four hours. But I
just feel like if you were sitting there waiting, you know,
(02:00):
to to cash in on the on the big great cut,
you know, fifty basis points is a double not much
there for you.
Speaker 1 (02:08):
So what's going on? Is it just because they don't
have to or is there something else that's playing into this.
Speaker 2 (02:13):
Well, I think it's a combination. So I don't want
to put it all on the banks. But because because
there are those international forces, they did all see it coming.
So we got out to any basis points, I guess,
starting on the Tuesday, and then then quietly sort of
and I'm sort of talking about the one year, one
year sort of fixed rate roughly, you know, one to
(02:33):
two year fixed rates, where a lot of Kiwis are
Kiwi's are really more six months and a year at
the moment because they've stayed short because they're expecting to
see it come down. But you know, Adrian Ows warned unfortunately,
unless we see a change in the sort of the
global outlook, and you know, he does say, look, it'll
be nice if the banks were repaired to pass on
(02:54):
a bit of the margin. At this point, the margins
are still higher than the average pre COVID. But unless
we see that, you know, it's going to take some
quite big cuts, and they're talking about going down to
three with the ocr but it's not going to pass through.
That's another you know, one point two five percent, but
really it's not going to be that big a pass through,
(03:14):
so that sort of creates a bit of problems, a
bit of a headwind for that interest rate lead recovery.
I guess.
Speaker 1 (03:19):
Yeah, interesting stuff. Hey, thank you very much. I really
appreciate that. Lim. That's Liam Dan, the Herald's Business editor
at large.
Speaker 2 (03:25):
For more from Heather Duplessy Allen Drive, listen live to
news talks that'd be from four pm weekdays, or follow
the podcast on iHeartRadio.
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