The expected interest rate hike in October may not be fully allocated to mortgages until April
The Reserve Bank has published research suggesting that it typically takes six months for increases in the official cash rate to have their full effect on mortgage rates.
The bank said borrowers began to feel the impact of increases in OCR within a month, but OCR then rose over time, before falling.
Based on past movements in mortgage rates, the central bank has calculated that a 1 percentage point change in OCR typically results in an increase in the two-year average mortgage rate of 0.34 percentage points (34 percentage points). base) in one month.
But six months later, that figure rose to 80 basis points.
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Reserve Bank Governor Adrian Orr has signaled that the bank is willing to increase OCR in mid-October, so research suggests the full effect of this could be felt in April.
âIndividual borrowers with longer-term mortgages can take months or years to disappear, delaying the impact on their monthly repayments,â said report authors Severin Bernhard, James Graham and Shaun Markham.
Their research also found evidence that banks that relied on New Zealand savers to provide more of their funding and large banks appeared to be slower and less likely to fully pass on OCR changes.