Dr. Robert Kelly:

There are three categories here. First would be what people locally call the trackers. They are a set of mortgages which essentially are tied within their contracts to the policy rate. If there is a change in the policy rate, those will feed directly in within a matter of weeks, the same as when we saw rate increases. There is another cohort of mortgages which are fixed. They will not reflect the changes at all until the fixed rate period ends. Then the final category is what is called the standard variable rate, SVR, cohort of mortgages and there it would be at the discretion of banks as how changes would be passed on. What we saw on the way up was, when we think about the level of change in the policy rate, the same magnitude was in no way reflected in the SVR rate. We saw some of the change pass through but it was not a direct one for one. It is hard so say what we would see necessarily on the way down. That is a commercial decision for a bank.