Finance Minister Nicola Willis is suggesting New Zealanders “shop around” after Westpac hiked some fixed-term mortgage rates, while Prime Minister Christopher Luxon is reminding people of the numerous Official Cash Rate cuts while his party has been in power.
The bank announced on Tuesday it was lifting its two to five-year fixed rates by 30 basis points after what it described as “significant increases in wholesale interest rates” after November’s OCR announcement. It cut its six-month rate by 20 basis points.
In making that OCR announcement, the tone of the Reserve Bank’s commentary suggested to the market another cut was unlikely. The wholesale rates, which affect long-term mortgage rates, subsequently increased.
Ministers have boasted about mortgage rate cuts in the past, often holding press conferences following OCR decisions by the independent Reserve Bank. National frequently posts on its social media pages about the savings Kiwis may receive as a result.
Asked for his view on the rates increasing, the Prime Minister noted there had been nine cuts to the OCR since the Government came to office and it was for the individual banks to make their own decisions.
Luxon said the new Reserve Bank Governor Dr Anna Breman had said she would monitor conditions.
“What’s important is we’ve seen rates come down, which has been really good,” he said.
On the increasing wholesale rates, the Prime Minister said what he wanted to see was “that New Zealanders get the best deal they can”.
“Each bank will make its own decision about its assessment of the long-term and the medium-term.”
Luxon said interest rates were relatively low internationally, inflation was “under control” and there were signs of growth in the economy. Inflation was at the top of the target range at 3% in September, but economists expect it to track down.
Willis said her message to New Zealand was “shop around”.
“Westpac have made that choice [to lift some rates]. Other banks have not. I really want to see New Zealanders seeing that they have some power when it comes to where they take their mortgage and don’t just look at the headline rates.
“Go and hold your bank’s feet to the fire. See if another bank will give you a better rate and make them compete with each other. Don’t just accept that you’re getting the best deal right now. Let’s make them compete.”
While Westpac is the only bank to have moved so far in raising some of its rates, wholesale rates affect all banks and commentators suggest others are likely to move as well.
Later, while expressing this message again in the House, Labour leader Chris Hipkins sarcastically said: “Switching banks is so easy”.
“How out of touch can you be?”
Act leader David Seymour, the Deputy Prime Minister, echoed Luxon in saying mortgage rates are a matter for individual banks but believed the Government was “carefully managing” its own spending to take pressure off inflation.
“Everyone would like to be able to borrow cheaper, that frees up cash in the economy, means that people have more to spend going into Christmas, and that’s been a positive thing for most people.
“However, you can see banks have to make their judgment and I would never interfere in a bank’s ability to choose its own policies. It’s up to them and their customers to work out what they want to do.”
Hipkins said the interest rate hike “highlights the problem with the Government’s overall economic strategy here”.
“They’re waiting for the Reserve Bank to save them because they haven’t got a plan to tackle the cost of living or to grow the economy.”