Reserve Bank of New Zealand Governor Graeme Wheeler’s developed-world leading monetary tightening is being blunted by Australian-owned mortgage lenders.
Banks including ANZ Bank New Zealand Ltd. and Westpac Banking Corp. (WBC) have lowered some fixed mortgage rates by more than a quarter-percentage point since January as the cost of global funding falls. That’s hindering Wheeler’s efforts to cool the economy with three quarter-percentage-point cash rate increases this year, the first among developed nations in 2014.
New Zealand joins countries including China, the U.K., Canada and Norway, which are seeking the right policy mix to deflate potential housing market excesses, with some taking steps that limit credit rather than rely solely on rate increases. Months after New Zealand last year implemented curbs on the riskiest mortgages to tame prices, buyers are turning to lower fixed-rate loans that could re-ignite the property market and pressure Wheeler to raise the cash rate more aggressively.