The mortgage market has gone quiet over the past week with few changes in rates.
As we have seen recently, lenders can move mortgage rates without prompting from the Reserve Bank through a change in the official cash rate (OCR) but it may take another pronouncement from the central bank there is one due on September 11 to move the mortgage market again.
Lenders have reacted already to the last cut, in July, the first for five years and economists agree there will be a further cut on September 11.
Ian Park, head of retail banking at ASB does not expect any movement before the next OCR announcement. Lenders' responses then will depend on the Reserve Bank governor's comments and the fragile offshore markets, he says.
"There is still some uncertainty offshore and I think we are still waiting for some consistent positive reporting in the world markets."
William Cairns, of non-bank lender General Finance expects lenders to pass on to borrowers two of the three OCR cuts that he says the market is expecting by Christmas.
"Lenders are concerned about their margins and the cost of funding."
Nick Tuffley chief economist at ASB says that since the market digested the July OCR decision, wholesale interest rates have been "largely rangebound" there has been no fresh downward pressure on interest rates.
"The market is already building in about six 25 basis point OCR cuts over the next year it has well anticipated future Reserve Bank action, so there is a limit to how much further the market can push wholesale rates down.
"I would expect that mortgage rates will gradually trend down provided the Reserve Bank continues to deliver the cuts anticipated. However, the impact will be more noticeable in the shorter-term rates, as over time short-term wholesale rates will trend down to reflect the fact that the expected rolling average OCR for given terms will progressively decline.
"The market will remain heavily influenced by international developments and there is yet to be any improvement on that front. If anything, credit concerns in the US are to the forefront again, with a lot of focus coming back on the key US mortgage underwriters Fannie Mae and Freddie Mac."
Tony Alexander, chief economist at BNZ has also sounded a warning about the international situation suggesting that rates in the US will be rising in 2009 to deal with inflation and that this may offset some of the reductions in funding costs for New Zealand lenders as the credit crisis eases.
The picture that commentators are painting then is one of uncertainty about how steeply mortgage rates will fall as the OCR falls.
Competition can be a great friend to borrowers but it will be interesting to see how aggressive lenders will be during this year's spring house-moving season.
William Cairns does not expect lenders to campaign vigorously this year. "The banks are still conserving cash as I do not think they have disclosed the last of their bad debts."
BNZ is running a mortgage promotion at present and this is notable for its lack of emphasis on price. The bank had become famous for its hard-hitting "unbeatable" pricing campaign.
The bank's current promotion is concentrating on its Fly Buys mortgage product, offering borrowers 2,000 bonus Fly Buys Points on Loans over $150,000. Customers must also choose two of BNZ's Out of the Box banking products, a transaction account and household insurance, for example.