OCR Pass Through Transparency

Delivering transparency on the pace at which financial institutions respond to changes in the Official Cash Rate

The Reserve Bank of New Zealand (RBNZ) sets the official cash rate (OCR) to achieve and maintain price stability (inflation). Banks and other financial institutions like credit unions, building societies and some finance companies use the level of the OCR as one of the factors when they determine interest rates offered to their customers.

When the RBNZ changes the OCR the financial institutions may make changes to their interest rates, but that can take time depending on the institution. The table below shows the size of interest rate changes and the time taken for the change to take effect for new and existing customers of floating rate mortgages and on call savings accounts.

The FMA has requested information from eight financial institutions¹ that provide ~98% of housing loans in New Zealand². These financial institutions already provide information about the interest rates applicable to their products, and when they are moved, through a variety of channels.

We are publishing this information to:

• Improve transparency of the pace at which banks pass through changes to the RBNZ's Official Cash Rate (OCR) for new and existing customers.
• Provide consumers a centralised source of information to view the interest rates of the financial institutions participating.
• Illustrate the changes made to interest rates on two key products affected by moves in the OCR and, importantly, when those changes come into effect for new and existing customers.
• To assist consumers in making informed decisions.