Finance Minister Nicola Willis is encouraging borrowers to show they have power, shop around, and haggle with banks.<\/p>\n
Her comments come with people who hoped the Reserve Bank’s November 26 Official Cash Rate cut<\/a>\u00a0would lead to banks reducing fixed-term mortgage rates being disappointed.<\/p>\n In fact on Tuesday, Westpac NZ<\/a>\u00a0increased some fixed rates by 30 basis points. It did cut its six-month rate by 20 basis points, while its one year and 18 month rates were unchanged.\u00a0<\/p>\n Asked about Westpac\u2019s decision to increase some of its fixed rates, Willis said:\u00a0\u201cWestpac have made that choice, other banks have not.\u201d<\/p>\n Willis said New Zealanders should shop around and she wanted them to\u00a0see that they have power when it comes to where they take their mortgage.\u00a0<\/p>\n \u201cDon\u2019t just look at the headline rates, go and hold your bank\u2019s feet to the fire, see if another bank can give you a better rate.\u201d<\/p>\n \u201cMake them compete with each other, don\u2019t just accept that you\u2019re getting the best deal right now,” Willis said.<\/p>\n “Let\u2019s make them compete.”\u00a0<\/p>\n Westpac\u2019s increases come a few weeks after Willis called<\/a>\u00a0on the banks to “pass on as much as possible” following an Official Cash Rate (OCR) cut.\u00a0<\/p>\n Select chart tabs<\/p>\n 2 years % Breman points to rising rates in wholesale markets<\/p>\n Earlier on Wednesday new Reserve Bank Governor Anna Breman was asked about Westpac’s hikes and noted wholesale market interest rates had risen.\u00a0<\/p>\n \u201cMy understanding is that the shortest variable rates have followed downwards after the [Reserve Bank] rate cuts but the longer dated mortgage rates have gone up,\u201d Breman said.\u00a0<\/p>\n \u201cWe have to look at the overall picture, but one way as an economist to describe that is to say that some part of financial conditions have tightened a bit and we have to evaluate how that affects the economy if that\u2019s in line with the transmission that we want in monetary policy.\u201d<\/p>\n Willis was asked by a reporter about the wholesale rates and whether the Reserve Bank had mucked up.\u00a0<\/p>\n In response, she said \u201cthe Reserve Bank is responsible for responding to financial conditions as they see them unfold.”<\/p>\n Willis said Breman had made comments earlier about how markets interpret the OCR and what that means for financial conditions is one of the things the central bank analyses ahead of its interest rate decision.<\/p>\n \u00a0\u201cI\u2019m sure that they\u2019ll do that analysis,” Willis said.<\/p>\n Each bank makes its own decision<\/p>\n Prime Minister Christopher Luxon, who has also previously called on banks to pass on OCR cuts quickly to customers and encouraged consumers to shop around<\/a>, said each bank would make its own decision about its long-term assessment.\u00a0<\/p>\n He said the Reserve Bank would be continuing to monitor this and that he wanted New Zealanders to get the best deal they could.<\/p>\n He said there had been nine OCR cuts and interest rates were now relatively low, and inflation was under control.\u00a0<\/p>\n \u201cAnd you\u2019re seeing signs of growth in the economy and that\u2019s a good thing.\u201d\u00a0<\/p>\n Labour leader Chris Hipkins said the Government was waiting for the Reserve Bank to save them.\u00a0<\/p>\n \u201cNicola Willis has made this problem for herself,\u201d Hipkins said.\u00a0<\/p>\n \u201cShe actually said the Reserve Bank\u2019s one job is to keep inflation within the target band. They don\u2019t have a remit around employment anymore, they don\u2019t have a remit to grow the economy. That\u2019s the Government\u2019s job and they haven\u2019t got a plan to do that.\u201d\u00a0<\/p>\n Where the RBNZ\u2019s focus will be<\/p>\n On Wednesday morning, when asked by a reporter if she would be comfortable if a future government broadened the mandate (for example, putting employment back into it), Breman said it was important to respect the democratic process.<\/p>\n The Reserve Bank would always do what is mandated in legislation and she did not have a preference for a single mandate, Breman said.<\/p>\n With her continual emphasis on the mandate, Breman said it was important that everyone understood the role of the Reserve Bank in the New Zealand economy.<\/p>\n \u201cI think I\u2019m simply doing it to stress where our focus will be and I\u2019m also doing it because we\u2019ve seen over the past few years how hurtful high inflation is, how much it harms households and businesses.”<\/p>\n \u201cIt erodes purchasing power. Volatile inflation is very complicated for small businesses to handle as well. So I\u2019m focusing on that because this is what we are expected to achieve – inflation within the target range, focusing on the midpoint.\u201d<\/p>\n “You want an economy that has lower, stable inflation because it helps to foster prosperity for all New Zealanders,\u201d Breman said.<\/p>\n Select chart tabs<\/p>\n 1 year % Economic growth was important but the central bank\u2019s tools are set up to focus on low and stable inflation, she said, which will promote growth and a strong labour market.<\/p>\n Snaphot<\/p>\n One useful way to make sense of the changed home loan rates is to use our full-function mortgage calculator<\/a> which is here<\/a>.<\/p>\n
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