Mortgage rates the lowest for five years

Banks are cutting their mortgage rates to the lowest levels in five years in response to the Reserve Bank's official cash rate review tomorrow - and property investors will be making the most of it.

TSB Bank dropped its 12-month fixed mortgage rate to 5.98 per cent on Monday, after Kiwibank and BNZ which dropped their rates to 5.99 per cent on Friday.

BNZ chief economist Tony Alexander said the bank expected Reserve Bank governor Allan Bollard to cut the official cash rate by 100 basis points on Thursday and the bank had moved its mortgage lending rate in anticipation of the move.

He said he expected the official cash rate to drop to as low as 3.25 per cent in the coming months.

"I think within a few weeks you will be able to get some home mortgage rates around the 5.5 per cent area and that will be about as low as they are going to go," Mr Alexander said.

To read the full NZ Herald story click here

Posted: 28 Jan 2009

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