When the bank lifted the benchmark rate the price of mortgages went up, when it cut, they went down. It has been the same with the interest on deposits. In theory, a cut in the official cash rate (OCR) means it is cheaper for the banks to borrow money, and this would usually be followed practically immediately in lower floating mortgage rates, and a cut in interest paid to depositors.

Westpac Banking Corp in New Zealand has announced it will not take any new loan applications from property investors who do not have a 40 per cent deposit from 4.30pm on Wednesday, some six weeks earlier than required by the NZ Reserve Bank. The central bank on Tuesday said it intends have the new lending restrictions in force by September 1 and asked lenders to comply with the spirit of the new regulations immediately.

A slower-than-expected pace of inflation has added to the case for an interest rate cut next month as a strong New Zealand dollar continues to keep a lid on imported prices. The consumers price index rose 0.4 per cent in the June quarter from a year earlier, missing the Reserve Bank's estimate of 0.6 per cent and tracking below the bank's target band for annual inflation of one-to-three per cent for the seventh straight quarter.