June is ending amid strong signals that mortgage rates are on the rise again, after a very long period of low stable levels. Rates have been unusually low since 2011.
Rate curves have steepened and are tipped to steepen further
Demand for housing loans has been unusually strong, with the house selling season running much longer this year.
We saw actual rate rises for fixed home loan terms of three to five years.
And we saw banks withdrawing their low-rate specials in the one year space.
BNZ kicked off the change by withdrawing its 4.95% Classic rate on June 16. ASB did the same about a week later. And Westpac is ending its 4.94% this weekend.
It seems unlikely one year fixed rates below 5% will be around for much longer.
Sharply rising swap rates have pushed banks to raise fixed rate offers above three years fixed.
Five year swap rates started the month at 3.5% and ended 50 bps higher at about 4.0%. That represents the largest monthly wholesale cost rise in five years, since early 2009.
And mortgage rate offers have been adjusted to reflect these rising costs; there are now few rate offers for five years fixed below 6.0%
Customers have been moving out of variable rate products into fixed rates because these rates have been lower. But the scramble has been for the one and two year fixed terms. In a rising rate environment there may be many borrowers who should consider longer terms while rate offers between lenders have a wider-than-usual range and before some institutions adjust to their higher costs.
See all advertised mortgage rates here.
| 1 yr | 2 yrs | 3 yrs | 4 yrs | 5 yrs | |
 |
4.95% | 5.45% | 5.80% | 6.10% | 6.30% |
 |
5.19% | 5.45% | 5.95% | 6.15% | 6.45% |
| BNZ | 5.25% | 5.40% | 5.80% | 6.10% | 6.30% |
| Kiwibank | 4.89% | 5.45% | 5.80% | 6.10% | 6.25% |
 |
5.19%* | 5.50%* | 5.90% | 6.15% | 6.35%* |
| *from July 1 | |||||
| Co-op Bank | 4.94% | 5.45% | 5.80% | 6.10% | |
| HSBC Premier | 4.99% | 5.35% | 5.75% | 5.99% | 6.20% |
| SBS / HBS | 4.95% | 4.99% | 5.65% | 5.65% | |
 |
4.88% | 5.45% | 5.80% | 6.10% | 6.30% |
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Mortgage choices involve making a significant financial decision so it often pays to get professional advice. A Roost mortgage broker can be contacted by following this link »
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Fixed mortgage rates
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4 Comments
The early birds...!
"Investors have pulled $23.7bn from US bond funds in the past four weeks – the heaviest withdrawals since October 2008 - as they prepare for an end to America’s quantitative easing habit"
http://www.telegraph.co.uk/finance/economics/10149142/Investors-pull-23bn-from-US-bonds-in-a-month.html
the slow to escape will be the worms
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