March 5, 2008 4:01pm by David Farrar

Interest Rates

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I’ve noticed in recent weeks that mortgage rates have been going up despite the official cash rate staying constant for the last six months. So I checked out the Reserve Bank data.

So on the graph you can see the OCR and the average floating first mortgage rate. And sure enough it has been starting to creep up.

The gap between the mortgage rate and the OCR in Feb 2008 was 2.40%. At times it has been as low as 2.00% and the average for the last four years is around 2.25%.

Now I’m not sure what this means, but could it be an expectation that the OCR may go up again? Or are the banks just increasing their margins?

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