We also see this with the 2-year rate. The average bank is discounting this rate by 0.16%.
It’s true. Rates have gone up. But if you just look at the advertised rates, you’d think they’ve gone up more than they actually have.
Why do banks do this?
Banks are worried about the war in Iran. And they are seeing their costs go up.
But they’re still competing hard for business. So they’re discounting behind the scenes.
The sticker price goes up. But, some of the negotiated prices stay roughly the same.
That’s really hard to see from the outside.
Where could mortgage interest rates go from here?
Today, Iran and the United States agreed to a 2-week ceasefire. That’s already pushed the price of oil below US$100 a barrel.
That matters for New Zealand because oil prices feed directly into inflation.
The Reserve Bank expects headline inflation to rise to 4.2% by June this year. (Just announced today). That’s outside their 1–3% target band.
