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Westpac and ASB both announce fixed rate reductions. ASB gets very competitive with long term rate offer. Kiwibank responds

Westpac and ASB both announce fixed rate reductions. ASB gets very competitive with long term rate offer. Kiwibank responds

Updated with Kiwibank rate cut announcement

Two major banks announced mortgage rate cuts this morning. They have now been joind by Kiwibank who have also cut rates

Westpac has reduced its 2 year 'special' by -30 bps to 5.49%.

It has also reduced all its standard rates from 1 year to 5 years. But none of these changes are market-leading.

Going against the trend, it did raise its 6 month fixed rate offer by +9 bps to 5.89%.

On the other hand, ASB has trimmed two of its 'special' rates.

Its 2 year fixed 'special' has been cut by -6 bps to 5.39%.

Its 5 year fixed 'special' has been cut by -24 bps to 5.75%.

In fact, that 5.75% rate is now the lowest in the market for a 5 year fixed term.

Having a hotly competitive 5 year rate is somewhat ironic in light of comments yesterday by ASB CEO Barbara Chapman who claimed the new TSB Bank 10 year rate is no threat because "locking yourself up [in long term rates] isn't attractive for everyone" for a variety of reasons.

ASB 'specials' require a 20% equity in the secured property.

Westpac 'specials' require the same, plus salary credit to a Westpac transaction account, and a Westpac credit card or specified insurance product.

The ASB changes announced today also apply to BankDirect and Sovereign.

All these changes come into effect today.

Kiwibank has announced their intention to cut mortgage rates on Monday.

Its three year 'special' is to go down by -34 bps to 5.55%, the same rate they have for two years.

Their four year standard rate is being reduced by -40 bps to 5.99%.

And their five year 'special' is being reduced by -10 bps to 5.79%.

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 compare as at 9:00 am Friday, February 13, 2015:

below 80% LVR 1 yr 18 mths 2 yrs 3 yrs 4 yrs 5 yrs
             
5.39% 6.09% 5.39% 5.79% 6.49% 5.89%
ASB 5.59% 5.70% 5.39% 5.59% 5.99% 5.75%
5.69% 6.09% 5.39% 5.69% 6.49% 5.79%
Kiwibank 5.69%   5.55% 5.55% 5.99% 5.79%
Westpac 5.99% 6.09% 5.49% 5.89% 6.49% 5.99%
             
5.59% 5.49% 5.59% 5.74% 5.89% 5.89%
HSBC 5.45%   5.65% 5.79% 6.49% 6.49%
SBS Bank 5.59% 5.74% 5.19% 5.49%   5.79%
5.70% 5.80% 5.50% 5.95% 6.40% 6.50%

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Mortgage choices involve making a significant financial decision so it often pays to get professional advice. An AMP360 mortgage broker can be contacted by following this link »
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Fixed mortgage rates

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5 Comments

Lowest 5 year rate since when? Was a 5.75 five year offered in 2009/2010?

 

I know 5.99 was as low as they got in 2012

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We borrowed from ASB at 5.25% fixed for two years which expires soon, so our rate will go up, not down. So much for all the hype about the 'lowest interest rates ever'?

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5.75 for 5 years is essentially cheaper than 5.25 for 2 years if you price in the risk you are saving yourself from if money starts reversing out of nz and nzd falls and inflation spikes and ocr rises... all possible, extra 0.5% is fairly cheap insurance that in 2 years you wont be sitting on 7% plus

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What is that 0.5% in actual cash per annum? 

The risk is an interesting one. The Q is just how cast iron is your contract with the bank?  Lets say the bank goes OBR and the receiver steps in and 'outside" variable rates are 15%.  Is the receiver legally obliged to keep your mortgage at 5.75%?  I dont believe that is the case?

If it isnt the case what are you actually paying extra for?

From the people I read the the thought is if / when we go into the event of the scale of 1929 then the money will indeed run to the USA out of everywhere as that is where investors think they will be safe.  What effect does that have and would you be insulated from it?

 

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http://business.financialpost.com/2015/02/09/why-you-should-care-about-the-banks-posted-rates-on-mortgages/

 

Since NZ banks looking at mortgage product innovations from North america e.g. 10 year fixed rate,  here's another idea for them:  (rbnz may be interested as well).  

Borrowers qualify on income testing only on the advertised carded rate. .....or otherwise are forced to take the 5 year locked in rate.   So it protects the borrower from hikes, and makes qualifying for the loan more difficult by using a higher qualify rate. A sort of macro prudential measure ....

 

"Clearly worried about consumer exposure to interest rate shocks, Ottawa moved a few years back to force consumers to qualify based on the posted rate or lock in mortgage rates. Lock in your rate for five years or longer and you can use the low rate on your contracts — as opposed to the posted rate — to get a larger loan than you might otherwise be able to get with a variable rate mortgage."  

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