The big news at the moment is the Reserve Bank of New Zealand's decision this month to keep the OCR at 2.50%. This is the first time Bollard has reviewed it and left it unchanged since July last year, stating that there is scope for further cuts and continues to expect to hold the OCR at current levels until the latter part of 2010.

We think to fix or stay with short term rates makes sense and fits with what the RBNZ is saying, so if you would like to discuss your options then please call the team at The Home Loan Group (NZ) Ltd.

Over the coming months there is a large amount of residential home loan debt that's fixed rate term is about to mature. This is going to mean that there is large number of New Zealanders who are coming off fixed rates and will need to make decisions about how to manage their loan going forward.

This is a critical time as there has continued to be interest rate fluctations and continued lender conservatism.

We encourage our clients to call us and sit down to discuss the strategy for moving forward. We will look at options available taking into account the term of the loan, the repayments, the loan amount structure and the interest rates. If you, or anyone you know, have loans maturing off fixed rates then please call the team at The Home Loan Group (NZ) Ltd for a discussion.

Households, businesses, banks and policy-makers should be thinking how they can influence recovery and ensure it is sustainable, Reserve Bank Governor Alan Bollard said today. Dr Bollard told a Wellington business audience that activity in New Zealand was near its low point, the global economy appeared more stable and trading-partner growth forecasts had stopped falling. New Zealand's large fiscal and monetary policy stimuli had bolstered domestic activity.

"We expect the economy to begin growing again toward the end of the year, but the recovery is likely to be slow and drawn out. It could also be erratic. To many households it may not feel like a recovery at all, with lower employment, house prices and wage increases into next year."

Households and firms were adjusting, cutting back on spending to match slower income growth, less available cheap credit, and falling asset prices.

"This adjustment has further to go. It will take a long time to adjust balance sheets, especially for households. While they have largely stopped building up debt, most people have less wealth than before the recession started.

"This shock has been so big the nature of the recovery is hugely uncertain, here and overseas. Potential growth rates around the OECD are likely to be lower, but just how much is unclear."

For the New Zealand recovery and subsequent expansion to be strong and long-lasting further economic rebalancing was needed. "Growth needs to be export and investment led, rather than consumption led. Household and government consumption need to be more restrained. Saving needs to increase, and the current account deficit needs to reduce.

"However, some recent financial market developments, especially the recent upward pressure on the New Zealand dollar, are working against this rebalancing. If markets are buying the New Zealand dollar on the expectation of a strong recovery they may end up being disappointed."

Given the uncertainties surrounding the recovery, it is important fiscal and monetary policy can operate effectively. "In this context, we are disappointed that banks have not passed on the April reduction in the OCR to short-term lending rates: they have an opportunity to help New Zealand's recovery by doing so," he said.

"Overall, we think the broader tightening in financial conditions seen over recent months risks undermining the recovery before it becomes self-sustaining.

"A premature rebound in household spending could jeopardise the next expansion. There is a risk people see the current stabilising of the housing market as a sign of another house price boom and a reason to borrow and spend up large again. We do not believe that would be sustainable.

Investors who rely on this could get hurt. And they could make it harder for businesses to invest in the export-led recovery we need.

"The world is now being swept by influenza A H1N1 09. It looks likely this will impact the economy by hitting staffing, through sickness, childcare and precautionary behaviour. If the incidence is severe, it would delay recovery."

Reserve Bank - 17 June 2009 - A copy of the press release can be found at www.rbnz.govt.nz/index.html

Did you know that The Home Loan Group (NZ) Ltd are able to offer you a comprehensive review of all your insurances. These include personal risk insurance, ie Life, Trauma and Income Protection as well as House, Contents and Car Insurance.

If you are a company owner we can also assess your business insurance.

When you receive your next insurance renewal notice why not give us a call on 0800 800 306 or e-mail to enquiries@hlgi.co.nz and one of our insurance experts will contact you with a view to ensuring you have the best insurance package for your needs.