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Westpac pushes long term fixed mortgage rates lower; other banks signal they will follow with even lower rates

Westpac pushes long term fixed mortgage rates lower; other banks signal they will follow with even lower rates

Westpac has taken the retail mortgage market lower with a sub 6% five-year fixed rate 'special' offer.

The bank also lowered two and three year rates, but only with their 'special' conditions.

In addition, we expect State-owned Kiwibank will join the trend on Monday with an even lower five year 'special', possibly as low as 5.89%.

This is the first time five year home loan rates have been below 6% since August 2013, and a few smaller institutions had sub 6% rates from June 2012.

We expect other banks to follow down into this territory.

Wholesale swap rates have been sinking fast recently although they did blip up a few basis points late in trading today.

But the trend is 'flat' - which means there is more room to lower rates at the five year end than for the one or two year terms.

These fast-sinking mortgage rates are undermining the RBNZ's rate lever potency. And there is not much they can do about it via the OCR.

That in turn will encourage the regulator to build non-rate tools to achieve its financial stability targets - using more and new 'macro prudential tools'.

The RBNZ will review the OCR next Thursday (January 29), although its statement will likely be very brief. The next full discussion of their thinking will come with the Monetary Policy Statement due on March 12.

See all banks' carded, or advertised, home loan rates here.

The current non-rate incentive offers are here.

This is how mortgage rates from the banks will probably compare as at 9:00 am Monday, January 26, 2015:

below 80% LVR 1 yr 18 mths 2 yrs 3 yrs 4 yrs 5 yrs
             
5.59% 5.70% 5.55% 5.99% 6.49% 6.59%
ASB 5.59% 5.70% 5.55% 5.59% 5.99% 6.49%
5.69% 6.09% 5.75% 5.59% 6.49% 6.59%
Kiwibank 5.69%   5.55% 5.89% 6.39% 5.89%*
Westpac 6.09% 6.30% 5.79% 5.89% 6.79% 5.99%
             
Co-op Bank 5.59% 5.59% 5.59% 5.74% 5.99% 6.25%
HSBC 5.45%   5.65% 5.79% 6.49% 6.49%
SBS Bank 5.59% 5.74% 5.49% 5.69%   6.19%
5.70% 5.90% 5.39% 5.95% 6.40% 6.50%
          * = possibly on Monday

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Mortgage choices involve making a significant financial decision so it often pays to get professional advice. An AMP mortgage broker can be contacted by following this link »
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11 Comments

That's only half a job Westpac; 12 and 18 month rates still miles higher than the other banks, and 2 year not very flash, either.

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Wow , do we even need an OCR when we have a 100% freely tradeable currency and open investment markets .... its actually of no effect whatsoever ?

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The general thought when it comes to falling interest rates is that it's great news for businesses, because they'll be able to go into more debt. Unfortunately, this isn't necessarily true. In fact, a falling interest rate is actually bad news for capital, because it destroys capital, as economists Antal Fekete and Keith Weiner have both pointed out.

This is extremely critical for investors to understand, because it means that as the Fed has lowered interest rates, it hasn't created capital or helped the economy. It's created malinvestment and destroyed capital that way indirectly and has destroyed capital directly.

This means that when looking at the economy, we should be factoring into account destroyed capital via falling interest rates -- even if it's not immediately obvious.

 

http://seekingalpha.com/article/824971-falling-interest-rates-actually-…

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The wine industry is in expansion mode. I haven't been able to get hold of plants for a couple of years due to demand. I was talking to some in the industry in California this week, same problem, big demand for plants, I suspect the same around the world.

In California its been like it for two years with at present a two year waiting list. Returns are average I'm getting $1800 a ton but not the $2800 I got a ton 10 years ago.

 In Nappa they wanted to talk how I run my vineyard with low imputs, Mexican labour is running low and they are looking at labour savings by mechanisation. Interesting way to spend a day. I never new they were running low on Mexicans.

 What the hell are people thinking, returns are average but cheap finance and the search for yield is going to blow the industry apart, the good news, a lot of cheap wine coming to a supermarket near you.

 

Just like the dairy industry

http://www.irishtimes.com/news/ireland/irish-news/dairy-sector-may-face…

http://www.cnbc.com/id/102346899#.

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Cheap money is going to decimate our traditional industries, be it wine ,dairy,beef, sheep or horticulture.  Cheap money chasing yield is the last thing the world needed.

 

The general trend of the U.S. dairy herd providing more calves to the beef industry is not likely to reverse. In the fourth quarter of 2014, the U.S. dairy cowherd is projected to be 79,000 head above that same quarter in 2013 and those animals should mostly be placed into feedlots during the first few months of 2015. Still, the year-on-year changes are forecast to moderate. Milk prices are forecast to erode to levels that truncate herd growth and by the second half of 2015 the number of dairy cows in the U.S. could decline slightly. Preliminary LMIC projections are that over the three year period from 2014 through 2016 about 400,000 head more dairy steers will be in U.S. feedlots than there were in 2013. The dairy cowherd is becoming more-and-more integral to the fed beef system. 

  http://www.lmic.info/current_situation_and_analysis/current-situation-a…
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I agree with you Andrew... It is the destruction of Capitalism.....

Real Capitalism  is based on the genuine nature of true "Capital Formation"..... which arises out of true "savings" which comes from deferred consumption...

What we have today is a Finacialization and bastardization of what Capitalism is meant to be.

Do we blame the money lenders...????    i'm not a christian ...but it reminds me of the bible stories...   OR... maybe we blame the Economists....  or maybe Govts..???

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This man has a view.

 

The Swiss franc dislocation provided an overdue reminder of how quickly highly leveraged trades can blow apart. It’s worth noting that this week’s losses in the New Zealand dollar (4.4%) and Australian dollar (3.8%) surpassed the decline in the euro (3.1%). New Zealand and Australian dollars have been popular “carry trades” targets. Eastern European currencies were under further pressure this week. The Singapore dollar, Malaysian ringgit and Turkish lira all declined at least 1% this week. King Dollar also inflicted more pain in commodities markets. WTI crude dropped 7.8% to an almost six-year low. The GSCI Commodities Index sank 3.0% this week (down 9.2% y-t-d) to the lows since early-2009 lows. All is not well in the global economy. Read more

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Shame you weren't in the Hawkes Bay three years ago then... many were ripping all the vines out because the market had collapsed.

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Well I Just got 5.59% five year fixed rate and $2500.00 from  my existing bank and broke a 5 year 5.75 mortgage

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whi do you bank with?

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Cuts called for in Australia before it's too late

How much more are interest rate cuts needed urgently in NZ?

 http://www.smh.com.au/business/comment-and-analysis/glenn-stevens-must-act-fast-to-rescue-australias-economy-20150125-12xnrh.html

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