On 10th October, the Reserve Bank (RBNZ) delivered a 0.50% drop to the Official Cash Rate (OCR), reducing it down to 4.75%.
As a result of the OCR drop, we reduced our On-call account interest rate to 4.50% p.a. (down 0.50%).
From 22nd October, we are lowering our home loan and construction loan term investment interest rates (and the associated borrower interest rates) to be:
- Home loans: 6.50% p.a. (down 0.50%)
- Construction loans: 7.00% p.a. (down 0.50%)
- Personal loans: no change.
With a further OCR cut expected in late November, we’ll further reassess our interest rates at that time.
Investment wait times
Since May this year, we’ve maintained a reasonable balance between supply and demand. Here’s how recent wait times have looked:
- Home loans: 2 days
- Construction loans: 1 - 2 weeks
- Personal loans: long waits (more on this below).
Looking at our lending pipeline, we have around $24m in new home and construction loans settling before the end of October, so we expect wait times to either stay the same or even shorten. Unfortunately, no changes are expected for personal loans.
Interestingly, there has been relatively few construction loan term investments sold on the secondary market this month, perhaps investors are hanging on to what they’ve got?
Personal loans
We’ve seen very low volumes in new personal loans over the last six months. This is because the quality of applications hasn’t met our credit standards, and we won’t compromise on quality.
However, this also means we need to think about the value of personal loans as an investment option and whether it is sustainable. Our approach will be reviewed between now and Christmas.