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Moves in mortgage and deposit rates since the RBNZ started OCR hikes show savers losing out, bank margins rising and competition in the borrowing market

Moves in mortgage and deposit rates since the RBNZ started OCR hikes show savers losing out, bank margins rising and competition in the borrowing market
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By Gareth Vaughan

Moves in mortgage and deposit rates since the Reserve Bank began increasing the Official Cash Rate in March show savers losing out, bank margins rising and competition for borrowers meaning there are still competitive home loan rates on offer.

The Reserve Bank increased the OCR for the first time in almost four years on March 13, and has since made a further three increases including last Thursday's 25 basis points hike to 3.50%. In total the OCR has risen by 100 basis points in five months.

Interest.co.nz has reviewed average carded, or advertised, bank mortgage and deposit rates between March 7, the Friday before the first OCR hike, and July 25, the Friday after the most recent increase.

This shows the average carded floating mortgage rate up 67 basis points to 6.45%, although as of last Friday only ANZ and ASB had increased their floating mortgage rates post last week's OCR increase. BNZ, Westpac, TSB, Kiwibank and the Co-operative Bank have since followed suit. The banks that have hiked now have carded floating rates between  6.59% and 6.75%.

Between March 7 and July 25 the average one-year mortgage rate increased 52 basis points to 6.01%, the average two-year rate rose 37 basis points to 6.33%, and the average three-year rate rose just 3 basis points to 6.45%.

Banks have been targeting the two and three year fixed terms with "special" offers including the likes of SBS' 5.95% three year rate, TSB's 5.80% two year rate, and HSBC's 5.85% one to three year rates for its "premier" customers. Unsurprisingly borrowers have been flocking to fix their mortgages.

For savers, meanwhile, the average six month carded, or advertised, term deposit rate is up 27 basis points to 4.09%, and the average 12 month term deposit rate is up 25 basis points to 4.32%.

The margin between the average one year mortgage rate minus the average one year term deposit rate has increased by 27 basis points to 1.69%. The margin between the average one year mortgage rate and the one year swap rate has risen 12 basis points to 2.14%. And the margin between the average one year term deposit rate and the one year swap rate has narrowed by 15 basis points to 45 basis points.

Over the March 7 to July 25 period credit default swap spreads for investment grade corporates fell about 10 basis points to around 61 basis points.

No chart with that title exists.

See all bank carded, or advertised, home loan rates here

See all bank carded, or advertised, term deposit rates for one to nine months here, and all rates from one to five years here.

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29 Comments

How can the savers unite and get a fairer share from the banks' increased lending rates?

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Remove your money.

regards

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Yes, that's just what the Aussie banks do - all that hard work to pay the marginal bank debt tribute gleaned from New Zealanders with savings goes right back to Aussie in the form of repatriated profits - at a magnitude recorded in $billions.

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.... they trade their stock on the NZX ... as Your Landlord says , buys some stock , and become a bank shareholder , align your outlook with the bank's success ...their earnings are mostly returned to investors via generous dividend payouts ...

 

Or hang around here whinging eternally about the Aussies and their banks ...

 

... your choice !

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Of course then you are exposing your capital to risk of loss.  Many OAPs expect their money to be safe and "guaranteed" and pay a "decent" interest rate, shares are clearly not of the first 2.  Risk v gain, not so sure the dividends are high enough given the risk of teh x2 housing buble in NZ popping. Of course the tax payer will be the backstop..

 

 

regards

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Some alternatives that don't involve putting capital at risk:

move your banking to the co-op, any excess profits are returned to it's customers.

move your banking to kiwibank, any excess profits reduce the tax you have to pay.

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Like I said, remove your money, otherwise, suck it up.

regards

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Buy shares in the bank.

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... the earnings yield ( inverse of the PE ratio ) for the ANZ is 7 % .... and the actual gross dividend payout is 5.77 % ...

 

You're right Mr Landlord , it's a no brainer , stop whinging about the banks , own some !!!!

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Cripes, I bathe in JPM certs from my old stock bonuses gleaned from Chemical Bank - too much of a good thing could be considered outsize greed.

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If banks make more profits and become strong, it is good for the economy. It is the duty of all citizens to subsidise the banks and make sure they stay strong and profitable and big. That way, the government need not come to their rescue in another bailout, guarantee scheme, etc. (Never mind, the governments will do that anyway, if there is another banking/financial crisis)....

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Not so sure about buying banking shares , [ edited. Ed], but i am moving funds to Co-op bank who offer a slightly better return an dprofit share. Large movements or withdrawal of funds would sway bank attitudes, although i doubt if that will happen.

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I think it's fair to say that most big businesses are corrupt in some form or another.Their bigness has usually been created bypriveleges and exemptions.

However regarding bank shares they are something i thought i would never be able to afford until Heartland Bank appeared.Purchased mine at 47c sometime ago and recently sold half of them at 91c and thats after recieving divedends that have been ok.A rare victory thats for sure.

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Thanks for that information, well done ,i was involved in the ING/ANZ frozen funds group at committee level so although we won the day after a two year battle i am afraid i still have a bitter taste in my mouth.But i will view your suggestion with an open mind . I think when you have a head start on the monopoly board it opens up the doors to unfair advantage which people in power abuse, common term being fraud , but different rules appear to apply to how far up the greasy pole you are.

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You can't' afford bank shares except heartland?

 

With Westpac and ANZ about $35 on the NZX that must mean you spent less than $35 on those heartland shares.  So they doubled in value to $70, now your sitting on $35 profit, and you then sold half to realise half that profit and recoup your initial investment.  Now tell me, how much brokerage did you pay on both those transactions?

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Got this while ago:

Mike bought a donkey from a farmer for $100. The farmer agreed to deliver the donkey the next day. In the morning he drove up and said, ‘Sorry son, but I have some bad news. The donkey’s died.’ Mike replied, ‘Well just give me my money back then.’ The farmer said, ‘Can’t do that. I’ve already spent it.’ Mike said, ‘OK then, just bring me the dead donkey.’ The farmer asked, ‘What are you going to do with him?’ Mike said, ‘I’m going to raffle him off.’ The farmer said, ‘You can’t raffle a dead donkey!’ Mike said, ‘Sure I can. Watch me. I just won’t tell anybody he’s dead.’ A month later, the farmer met up with Mike and asked, ‘What happened with that dead donkey?’ Mike said, ‘I raffled him off. I sold 500 tickets at $2 each and made a profit of $898′ The farmer said, ‘Didn’t anyone complain?’ Mike said, ‘Just the guy who won. So I gave him his $2 back.’ Mike is now head of a very profitable bank
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Interesting comment Phil, I'd be interested to hear the specifics about how the are corrupt - you'll obviously have some considering the comment 

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Having spent almost 7 years researching the subject after being sold junk bonds by ANZ along with amny others we took the time to find out why, i would say the subject is well documented, from presentations like "Money Masters" to excellent books like ":The 13 bankers" "Lords  of finance' Bankers who broke the world 'even a New Zealand production "You can bank on It.

I have also been fortunate to have friends who include the head of lehmans Trading desk in a major Asian capital when they went down to head of LLoyds TSb Commercial in another major western city. So a lot of research, one of our own NZ ANZ/ING frozen funds group has been working on our book "The Hustlers" which once legalities are eventually sorted we hope to get published, many of our members were threatened during our campaign so one has to choose words carefully,but its all out there an dthe harder you scratch the more you uncover , there are reasons for quotes made by some of histories most famous.

f the American people ever allow private banks to control the issue of their  currency, first by inflation, then by deflation, the banks…will deprive the people of  all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. – Thomas Jefferson in the debate over the Re-charter of the Bank Bill (1809)

When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes… Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” – Napoleon Bonaparte, Emperor of France, 1815

 

Issue of currency should be lodged with the government and be protected from domination by Wall Street. We are opposed to…provisions [which] would place our currency and credit system in private hands. – Theodore Roosevelt

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Yes very well documented about some of the US banks and some European ones but I took it that the discussion was about taking your money out of NZ banks. Was your comment a gross generalisation about all banks (I.e.it  doesn't matter how your bank, or region/country performs some people will lump you with the others - the "all dairy farmers are dirty dairy farmers" stupidity for instance) and are you saying  that ANZ deliberately sold you "junk bonds" knowing ( and if so therefore all NZ banks are guilty). It's the gross generalisations on this site that erk me Phil 

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Very sorry if i erk you and i do agree generalisation can be assumption, but from a life in business i do find that more often than not that if there is a bubble or being kind a good fiddle it does have a habit of becoming widespread.If the system is endemically corrupt its not always easy to avoid the contamination .

Banks are mostly global institutions and linked to one another, no i am not suggesting that all New Zealand banks fall into this group and ofcourse we know New Zealand banks are thin on the ground and many that were once New Zealand banks have a chequered past , The book "you can bank on it " is about BNZand people who lost their homes and lively hoods to that bank.

 

There is also the theory that if there are wishing to do you harm and three who are not and you have the opportunity to close the door on them do you sacrifice yourself for the three good ones.

However i did advise  a list of viewing and reading material which enables readers to draw their own conclusions as to who is bad and who is good, [ deleted. Ed].

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Sorry Phil, I wasn't trying to be personal about it. I have worked for banks here in the past at a high enough level to know that there isn't any corruption or deliberately misleading of their customers. Sure there's almost always some poor lending at the top of the cycle which banks get caught up in, but no differently than the borrower who was doing exactly the same thing - BNZ in the 80's, and not just them, was an example. As far as high yield bonds go, I'd doubt  the ANZ was selling something that they knew would be defaulted on, just higher yield stuff, with higher risk.

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The ING/ANZ frozen funds debacle went on for over two years ANZ were found guilty by the commerce commission, the case went to parliament and after an initial offer of 6 cents in the dollar, our group achieved an almost full payout.

The campaign became very nasty, i have now been warned not to say naughty things about ANZ and banks, inspite of the fact that millions of people worldwide have suffered recession as a result of banking. The bonds i mention were rated grade A by ratings agencies , and i would agree that most bankers would not have had the intelligence to work out they were duds, our issue was misrepresentation. The file is well documented on youtube under NZ frozen funds group files i believe. The we live in your world campaign was very much  a result of our campaign when they eventually woke up to the fact that bank world is a very different world from the one we live in.

I also find that in most industries when they are challenged the members have a habit of closing ranks, sorry if i sound controversial but during our campaign i came face to face to with many members who died , became seriously ill or lost their lively hoods,many wer between the ages of 60 to 85, i find ignornace as a very poor excuse and is not often accepted in the eyes of the law.

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I fully understand your angst Phil based upon that experience with the ING/ANZ debacle. I always found it incredible that some banks, US in particular, could bundle up subprime mortgages and on-sell them whilst simultaneously shorting them in the market - that is a absolute admission that they knew they were cr&p - who went to jail for that ? I don't know the ING/ANZ liability other than the credit rating agencies were likewise highly culpable and seem to have got away with it, but to the extent that ING/ ANZ knew the truth is very debatable to my mind admittedly with no real knowledge.

 

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Grant, we had some top people working on the issue for over two years, obviously i am not permitted to say too much but if more of it had become public knowledge, i think there would have been shock and horror. In my mind the losses that people suffered during this period caused great damage to the New Zealand economy, imagine what good the billions lost could have done if spent in our shops and on services.

The commerce commission had to employ a specialist to work on the case , some of the letters that our members received were incredible, beyond belief, we had  a lot of insider information and although i was considered more outspoken and perhaps radical by some, my suspicians and fears have since been backed up by a guy whose job it was to advise government on ways to regulate and prevent future problems.In view of the finance company situation, i don't think government had learned much, however some ministers were actually on the same page , but others were ex bankers ,from some well known American names. Anyway nice talking with you, i can recommend "The 13 Bankers" or if you have plenty of time download "The Money Masters DVD, i would also say a five minute watch of Victoria Grant's presentation is a good watch. i am a member of "Positive Money " a group determined and commited to change the monetry system and reduce the power that banks hold over us.

Our own NZ story hopefully when we get past the legalities is called "The Hustlers" ,the book has now been worked on in Germany for 5 years , i consider that the efforts of a small group of determined investors here in NZ won a landmark case and have a lot ot be proud of, they took on Goliath and won. ING had to leave New Zealand and ANZ had to re brand their products to become "One Path".

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Phil, you've been thru the wringer.

Thou it took an age to move thru the courts (2009) these were always interesting known examples

http://www.internationaltaxreview.com/pdfs/itr-week/BNZcourtdecision.pdf

how they came about: take a look at page 19, para 46, 47, 48.

and

http://www.scribd.com/doc/20770455/Westpac-v-Commissioner-of-Inland-Revenue-Judgment-jtk

 

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Hi Henry

I was going to mention the points you have introduced into the debate, but thought better of it ,not exactly outstanding examples of purity and honesty i have heard some say.

In any city around the world its not too difficult to see who resides in the largest castles , with names in neon high above us mere mortals.

Regards Philip

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Phil nailed you there Grant

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Very amusing and fitting.

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How ? Or are you into gross generalisations, even Phil admitted not. Please explain

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