Retail banks have started cutting their mortgage lending rates in anticipation of the Reserve Bank slashing its official cash rate, perhaps as soon as next month.
Kiwibank reduced its six-month rate by 0.2% to 5.69%, its one-year fixed rate by 0.2% to 5.39% and its five-year rate by 0.19% to 5.6%, effective from yesterday.
The ANZ removed all its ''specials'' except its two-year offer.
But it cut all its standard rates and some of the new standard rates were lower than the specials abandoned yesterday morning.
ANZ chief economist Cameron Bagrie said the changes to taxing capital gains on selected property sales, announced on Sunday by Prime Minister John Key, reinforced the view the OCR was heading lower, and sooner as opposed to later.
''We can't see why the Reserve Bank should wait to assess the impact of such demand management tweaks when core inflation is closer to 1% than 2% and the risk profile across the economy is clearly shifting.''
The past week had seen material policy shifts on the part of both the Reserve Bank and the Government to more explicitly target the demand side of the Auckland property market, he said.
The Reserve Bank was tightening loan-to-value ratio restrictions on Auckland residential investor loans and the Government announced measures targeting speculators and non-resident buyers.
A passive capital gains tax regime was being replaced by a more active one with a two-year period and resources given to Inland Revenue to monitor the new regime. Offshore buyers would require a New Zealand bank account and an IRD number.
Certainty surrounded the precise impact and there were a number of moving parts.
But ANZ suspected the impact would be stark, given the extent of house price movement of late, Mr Bagrie said.
''We believe sentiment could turn on a dime. We will be paying particularly close attention to the number of property listings over coming months which could rise sharply as sellers try to beat the October 1 introduction of the new measures.''
It was telling there had been such a breadth of policy responses in a short space of time, he said.
There was ''obvious'' financial stability or political justification for the moves but it involved the high New Zealand dollar and the Auckland property market - one factor keeping the OCR higher than would otherwise be the case.
Given commodity price falls, New Zealand needed a lower currency and only interest rate cuts would do that, Mr Bagrie said.
There suddenly appeared to be much more co-ordination between officials when previously it appeared as though they were at loggerheads.
In mid-April, the Government made some comments on interest rates that, while not necessarily undermining the Reserve Bank's independence, made it clear what its views were.
Arguably in response, Reserve Bank deputy governor Grant Spencer made reference to the need to use the tax system more to target the demand for housing and create some form of registry for non-resident buyers.
''Certainly, there was a bit of tit-for-tat rhetoric going on. But it is uncanny how these recent announcements close the gap in views.''
