The Official Cash rate was left unchanged last week at 3%. The Reserve Bank Governor noted that the economic outlook had weakened since his last statement in June. As a result he also indicated that the pace and extent of future rises may be moderated. We remain pretty comfortable with sitting on a floating interest rate as long as it suits individual circumstances.
The banks will be rubbing their hands with glee over the collapse of South Canterbury Finance. One could safely assume that a fair chunk of the $1.7 billion cheque that is being written out will find its way to the banks on term deposit. An amount of stimulus to the economy could also ensue as we wouldn’t be surprised to see a few taking the opportunity to upgrade the car, or replace the wonky freezer, and put the rest on term deposit.
In a further easing of home loan credit criteria, ASB Bank recently announced it was back in the home loan lending market up to 95%. They had been camped at the 80% mark since October 2008, so the move is pretty significant.
Have a great week. 😛