Interest Rate Update (November 2013)

The following graph shows movements in both the 3 month and 3 year Bank Bill yield rates, for the period January 2006 to September 2013. These rates are wholesale rates which are net of any margin charged by financial institutions.

Earlier in the year, the long term rate moved above the 3 month rate, an indication that the fall in rates may be coming to an end. However some rates have been seen to fall further.

Currently the 3 month wholesale Bill rate is 2.58% pa and the 3 year wholesale Bill rate is 3.23% pa, a premium of 0.65% pa or 65 basis points for the longer term.

This premium for the longer term rate has increased markedly over the last two months, indicating that variable rates are close to the lowest point, with the best opportunity to lock in longer term rates probably having passed.