By Janine Ogier
Tuesday 20th December 2005
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This week's gross domestic product data are likely to give more clues on the prospect of a further OCR rise in January.
The third-quarter growth figures will be released on Thursday and partial indicators have already hinted at a weaker-than-expected result than the 0.8% number forecast by the Reserve Bank.
Nonetheless, the data will imply a degree of economic resilience to tighter monetary conditions, with growth continuing at a modest clip, ANZ markets economist Cameron Bagrie says.
But that is expected to slip off in the fourth quarter.
The National Bank's business outlook survey last week contained ominous signs.
Firms' own activity expectations fell below zero, a level that has typically coincided with an economy in recession.
Interestingly, Monday's half-year economic and fiscal update from the Treasury showed it is now more pessimistic about the year ahead, forecasting real GDP growth to fall from 2.9% year-on-year in the year to March 2006 to 1.7% in the year to March 2007.
Despite the downward revision, Deutsche Bank chief economist Darren Gibbs sees even more downside risk in the Treasury's numbers, especially since they were finalised in mid-November, prior to partial data suggesting growth may have been weaker than many expected in the third quarter.
In the mortgage market, Westpac and HSBC were the first to raise their variable rate last week and other major lenders followed suit in the days afterwards.
Some lenders raised by 30 basis points, adding a bit to the 25-basis-point central bank change.
Surprisingly, Superbank lowered its two- and three-year fixed rates early in the week.
But that decrease was followed by similar cuts in three-year fixed rates by other lenders including Wizard, Bank Direct, Asteron, Cairns Lockie and General Finance.
Variable rates now range from the 8.35% offered by Tasman Mortgages to the 9.55% recorded by Westpac, ANZ, National Bank, ASB, BNZ and General Finance.
So far there have been 23 increases in the floating area of the market over the week.
One-year rates still vary from the 7.60% offered by Southern Cross to 9.10% from GEM Home Loans.
Two-year fixed terms range from the 8.15% offered by Kiwibank, Superbank and Wizard to 8.95% from Headstart.
Three-year rates start at the 8.0% offered by Kiwibank and end with Headstart and Westpac's capped rate of 8.85%. There was one increase for this rate, but six decreases.
Four-year fixed rates vary from the 7.95% offered by Loan Plan and Kiwibank to the 8.35% from Pioneer.
In the five-year part of the market, rates vary from 7.8% offered by Kiwibank, BankDirect and Mortgage Finance to Gem Home Loans' 8.6%.
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