Interest rates hold until late 2010

The Reserve Bank of New Zealand kept official cash rates on hold at 2.5 per cent yesterday, with Governor Alan Bollard hinting that they’re unlikely to go up until the second half of next year.

Mr Bollard said that business profits were under pressure because of the low level of activity and the strong New Zealand dollar.

“If the exchange rate was to continue its recent appreciation and/or the recovery in house prices were to undermine the improvement in household savings, then the sustainability of the present recovery will be brought into question,” he said.

Mr Bollard continued by saying there was still a chance interest rates could be cut further pending the recovery of the global economy.

Meanwhile, ASB has taken its floating home mortgage rate to historical lows, down to 5.75 per cent – the lowest it’s been in more than 40 years.

The bank has also increased some fixed term home lending rates and lowered short term deposit rates, with all changes aimed at reflecting the costs of funds and the level of risk associated with each lending category.

Loan Market recommends mortgage holders should conduct a home loan assessment on their mortgage regularly to ensure they still have the right finance package to suit their needs, in light of lenders changing their rates and home loan options.

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