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ASB first bank to raise 5 year mortgage rate back to 8%
ASB has become the first bank this year to raise its five year mortgage rate back up to 8%.
ASB raised its longer term rates by between 20 and 50 basis points (bps) in the wake of sharp moves higher in longer term wholesale rates in New Zealand and globally as investors fear heavy government borrowing and bond issues.
The move was accompanied by ASB's Bank Direct, and pre-empted by ASB's Sovereign raising its three, four and five year mortgage rates late on Thursday.
The last time a major bank in New Zealand had a five year mortgage rate at 8% or above was at the end of November, over six months ago.
ASB raised its three year rate by 20 bps to 6.95%; its four year rate by 30 bps to 7.55%; and five year by 50 bps to 8.00%. The new rates are effective now.
ASB's 5 year rate hit a low of 5.95% in late January and its sharp move back over 6% in February was an early indicator of longer term fixed rates rising across the board in mid-March. This sparked a rush by some floating mortgage borrowers into longer term fixed rates through late March, despite a 50 basis point fall in the Official Cash Rate on March 12 and another 50 basis point cut on April 30.
ASB's insurance and mortgage arm, Sovereign, announced that it would raise its three, four and five year mortgage rates on Friday by between 20 and 50 basis points (bps). Sovereign distributes via brokers and directly.
Mortgage rate announcements by Sovereign are almost inevitably followed by ASB a day or so later. Sovereign raised its three year mortgage rate by 20 bps to 7.05%; its four year rate by 30 bps to 7.65%; and five year by 50 bps to 8.10%.
Related Topics
Bank Direct raised its three year rate by 20 bps to 6.90%; and its five year rate by 50 bps to 6.95% 7.95%.
See all the latest rates on our mortgage rates page.
will be 10% in 18
will be 10% in 18 months time.
here we go again. looks
here we go again. looks like if it aint fixed by now best to ride on Bollards low variable (that he says he will keep low - yeah right) or short fixed terms while they last. looks like that window of opportunity is closing, for those intent to buy a home, at least if they are taking into account long term forecasting at long low rates
nice timing for the banks to reduce their rates on the next OCR, up .5 down .2
My mortgages expired yesterday and
My mortgages expired yesterday and I fixed for 5 years at 7.5% straight away, so Im vigourosly pumping my fist right now.
And just imagine what you
And just imagine what you could do with the money you 'saved'. That were lucky.
7.5% is gonna look real
7.5% is gonna look real low in a few months from now and like xmas in a couple of years!
So all these people who
So all these people who recently bought houses and fixed their mortgage rates at say 7.5% for 5 years are really pleased. Let's hope that when their house price has fallen by 10% that they still have a job and can pay their mortgage, otherwise they are toast.
hey shuttle - badminton
hey shuttle - badminton
Spidy... know the feeling, just
Spidy... know the feeling, just calculated over 5 years fixed at this stage just under 30k savings on one of my monkeys, perhaps one day i can actually slowly pay the mortgages off rather than just the interest... makes me wonder why i self doubted myself if i was doing the right thing. up the banks, that's when we know we would charge a break fee too, if they wanted out.... even more so when they reach 10%
Just as Bernard said a
Just as Bernard said a few months ago when discussing break fees etc...
unfortunately we where tied in to the higher rates and break fee in the log term did not warrant re financing at the low rates....
So we are locked in at what is now low rates, and even if they hit 10.5% end 2010, we are still better off than if we panicked and paid the break fees.
For those who have very large mortgages, 100% loans, loose jobs, believed the boom would last forever,it could be a very different situation paying off principle.
Bernard confirmed what we believed months ago
Very Happy Chappy
that's right Steps... Bernard aint
that's right Steps... Bernard aint all silly, just his 30% drop prediction. he is after all been hanging around financial circles for a long time. i agree with most of what he says, most of his advice. But hey he can't all be perfect all the time....
and i will re-state IMHO that the window of opportunity narrows, next we will have another change of rules for the bank criteria or similar to really make it hard for people to get into the property market. it is a bit of a closed circle and it isn't going to fall apart just cause one chappy says so.
strike while the irons hot i say...
Over the past 11 years
Over the past 11 years (since RBNZ started recording 5 year fixed rates) the average five year rate has been 8%.
The fact that the five year rate was 8% in early 2007 when the property market was red hot and the OCR 7.5% demonstrates that current monetary policy framework does not allow adequate control over the country's economic direction.
Interestingly anyone opting for a four year rate over the current three year, would need to expect a 1 year fixed rate above 9.37% in 2012 to be better off (1.7% the long term average). Likewise those opting for five year would need to expect a 2 year rate above 9.6% in 2012 (1.8% above the LTA). Perhaps the same people who took a 3 year rate last year at 9.6% rather than a 1 year rate at 9.9%, who must have expected the 2 year rate to be above 9.45% by now, are the same people who will lock in a four or five year rate at these new levels set by ASB?
I guess this means we'll
I guess this means we'll have another round of very public wailing and screaming from illiterates like Bollard, English and Key about "da bad, bad banks"?
The 5 year mortgage interest
The 5 year mortgage interest rates will go up to 9.3% in 2 years time. Then another recession start and then it will drop to 6.5% in three years time from today.
It is a cycle.
A cycle you say?..............................BURN HIM!!!!!
A cycle you say?..............................BURN HIM!!!!!
Yip thanks bernard. Fixed a
Yip thanks bernard. Fixed a month ago at rural farm rate of 7.65, seemed really high at the time and I was very unsure of the move. The floating rate currently is 9.5!!!!!
here's a prediction - 6
here's a prediction - 6 mths and 1 year rates to stay under 6% for the rest of the year, variable to start creeping up but nothing significant until Q2 next year, 3+years will go up and down over the next years (although agree we have passed the low) but will start falling again by the end of Q3 because there ain't no green shoots of recovery in the US in particular but a whole lot more pain and toxic debt still to be revealed. The US economy and financial sector is poked and rotten to the core and there isn't going to be any bull runs or golden sunrise for a good 12-18mths. Volatile times which will see people hunkering down again to ride it out.
Spidy you shoulda paid the
Spidy you shoulda paid the small break fee back in Feb and refixed at 5.95% for 5 years eh?
High inflation and double digit
High inflation and double digit interest rates will hit within a year or two, and Bollard and Bernanke will be overrun like possums in the headlights. More than two thousand years of monetary history has proven that printing up any form of fiat currency is doomed to failure - without exception. The delusion will rock on for a while longer, but reality will hit sooner or later. In all likelihood, property assets of most classes will be 40-50% down in 4-5 years time. Don't be deluded into thinking that things will turn around and all will be fine within a few years.
hear hear Ludwig.
hear hear Ludwig.
Ludwig, where do you see
Ludwig, where do you see wealth rushing to avoid the collapse of the currencies?
Wally : GOLD !!!
Wally : GOLD !!!
Gold is the next bubble!
Gold is the next bubble!
Pressident of Property Says: "that’s
Pressident of Property Says:
"that's right Steps"¦ Bernard aint all silly, just his 30% drop prediction. he is after all been hanging around financial circles for a long time. i agree with most of what he says, most of his advice. But hey he can't all be perfect all the time"¦."
30% drop, thats on the cards, and lets face it if he (we are) is 5% or s10% out and 6months off, that certainly doesnt make them wrong...
In 2006 I was predicting the proverbial was going to hit the fan, but a serious period of inflation in 2009/09...I may have been very wrong on the inflation part, but that is not the essential part...perfurbial hitting the fan big IS...regardless inflation deflation sub prime whatever, the advice was saying ....dump credit, free up money....establish good reserves and equity. If Bernard had said 15% ....that would have created the same reactions at the time, the 'core' basis for the prediction is the important part.
We still have another 3 to 5 yrs to see the 30%..but if we take the REAL 15% to 18% drop in houses now...not the 9% ave as shown by stats that do not show the true ave in a very changing market, we are well on the way to the 30% with a lot of time in hand.
The "silly" ppl are those who work on fundamentals and stats and ignore commonsense, and those who use only misplaced common sense, without any fundamental and stats.
Take Mike Moore, about a yr ago just before one of the big leaders meetings to address the crisis...free trade etc...he commented that they will all get together, agree not to make the same mistakes in the past, then go home and introduce protectionist policy.
That is commonsense, natural human/political reaction, that has repeated its self every time for centuries...funtmentals
Its all about all 3 stats, fundamentals and commonsense.
Think of it this way, money assets mean nothing if humans are not around and remains constant, add the human factor that creates, drives the market up down sideways, that puts commonsense and fundamentals over stats.