Ministry of Business, Innovation and Employment
The 25 basis points rise in the Official Cash Rate to 2.75% announced by the Reserve Bank of New Zealand today was widely expected said the New Zealand Bankers’ Association.
“The OCR rise has been clearly signalled by the Reserve Bank Governor for some time, and comes as no surprise,” said New Zealand Bankers’ Association chief executive Kirk Hope.
The OCR is part of a range of factors that drive interest rate changes. Other important factors that influence rate changes include the cost of funding from domestic deposits and the cost overseas wholesale funding.
“It’s a good time for mortgagors to assess their circumstances to help ensure they can manage an increase in the cost of borrowing.
“This is especially important for first-home owners who have borrowed at historically low rates.
“Talk to your bank about your particular circumstances. Banks are happy to provide information about products and services to suit individual needs.”
Hope added that the gradual rise in interest rates was good news for people with savings in the bank, especially those who relied on interest income from investments such as retirees.
Banking industry body the New Zealand Bankers’ Association said the union’s claims “undermine the great work that frontline staff do in engaging with customers”.
New Zealand banks continue to be strong and stable according to KPMG’s Financial Institutions Performance Survey for the 2013 financial year.
“Our banks are among the best funded and regulated in the world, and highly competitive. That’s good for New Zealand households, businesses and our economy,” said New Zealand Bankers’ Association chief executive Kirk Hope.
“The solid performance of our banks helped us get through the recession and is supporting our economy as we move into a period of growth.”
The KPMG report reflects the findings of the World Economic Forum’s Global Competitiveness Report 2013-2014 which rated New Zealand banks as the second most sound in the world after Canada.
“This is important because it helps our banks borrow money from overseas at good rates which can be passed on to New Zealanders,” said Hope.
The KPMG report found that despite lower funding costs, intense competition among banks has eroded the additional margin and effectively passed savings onto borrowers.
“Profitability is an important part of the banking sector’s strength. These returns allow banks to continue to invest heavily in New Zealand.
“In 2013 banks made a direct contribution to the New Zealand economy of $4.5 billion by running their businesses here and employing over 25,000 people. On top of this banks paid $1.5 billion in tax,” Hope said.
“We strongly recommend against using public computers and public Wi-Fi for internet banking,” said Bankers’ Association regulatory director Karen Scott-Howman.
Finance and Expenditure Committee
Parliament is considering legislation that would allow the Inland Revenue Department to collect contact details, bank account numbers and transactions of Americans living in New Zealand to pass on to tax authorities in the US. New Zealand Bankers Association chief executive Kirk Hope said if the information is not supplied, the Americans would impose hefty penalties on any investment there.
“People should have a good look at their circumstances and talk to their bank so they can be properly prepared for interest rate hikes,” says Bankers’ Association spokesperson Kirk Hope.
Now is a good time to prepare for rising mortgage interest rates said the New Zealand Bankers’ Association in response to the Reserve Bank of New Zealand’s Official Cash Rate statement today.
While the OCR has been left unchanged at 2.5%, the Reserve Bank has recently projected the cash rate could rise by 2.25% over the next two years.
“Mortgagors have enjoyed historically low interest rates for over two years. The cycle is now turning with some interest rates starting to rise,” New Zealand Bankers’ Association chief executive Kirk Hope said.
The OCR will continue to be an important driver of interest rate changes, but there are other factors that influence the level of the rate change including the cost of funding from domestic deposits and the cost overseas wholesale funding.
“Now’s the time to assess your circumstances and get your finances in order so you can manage an increase in the cost of borrowing. This is especially important for first home-owners who have borrowed at very low rates.”
“Talk to your bank if you have any concerns. Banks are happy to provide information about products and services to suit individual needs.
“On the flipside, the projected rise in interest rates is good news for people with term deposits. People who rely on interest income from investments, especially retirees, haven’t done so well recently. They stand to benefit from rising deposit rates,” added Hope.
Ministry of Business, Innovation and Employment