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Main banks are now setting the pace of home loan rate cuts

Main banks are now setting the pace of home loan rate cuts

ASB has set a new low in the current round of fixed mortgage rate cuts.

It is offering a one year fixed 'special' at 4.89%, down -10 bps from its prior 'special' for this term.

The offer is stated as 'limited time'. but no end date was announced.

ASB’s fixed rate home loan specials apply to customers who have at least 20% equity (i.e. a Loan to Valuation Ratio of less than or equal to 80%), have their salary or wages credited to a main transaction account with ASB and one other ASB product.

BankDirect and Sovereign have made the same change.

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

And see the non-rate home loan incentives here.

The new ASB mortgage rates will compare as follows on Friday morning:

below 80% LVR Floating 1 yr 2 yrs 3 yrs 4 yrs 5 yrs
             
6.49% 5.39% 5.39% 5.59% 5.75% 5.79%
ASB 6.50% 4.89% 5.10% 5.39% 5.75% 5.65%
6.34% 5.19% 4.99% 5.29% 5.65% 5.75%
Kiwibank 6.40% 5.09% 4.99% 5.39% 5.75% 5.60%
Westpac 6.40% 5.49% 4.99% 5.59% 5.75% 5.79%
             
6.45% 5.15% 4.99% 5.35% 5.55% 5.69%
HSBC 6.60% 4.95% 4.95% 5.40% 5.50% 5.60%
SBS Bank 6.39% 4.99% 4.99% 4.99%   5.59%
6.49% 5.45% 4.99% 5.40% 5.85% 5.85%

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11 Comments

More fuel to the Auckland housing bubble.
(1) House buyers can afford to borrow more, so can bid more in a housing market with poor supply.
(2) Baby boomers moving their money out of the banks due to low interest rate, to pump into property.

At the end of the day someone is going to be hurt from this. Possibly bank depositors, if a bank fails.

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Interest rates are having little effect on Aucland property as there are other more influential drivers.
NZ interest rates are still high relative to other developed countries.

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So what are those other drivers? I know baby boomers who have purhcased some rentals, as the interst rates at the bank have dropped alot. Yes NZ interest rates maybe slightly higher than some other countries, but they are at their lowest value historically in NZ. When the tide comes back in, people are going to find themselves over extended, as many people I suspect aren't budgeting for interest rates to go over 8%.

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Other drivers: foreign-based buyers, family members living in NZ buying on behalf of offshore buyers, 50k immigrants most settling in Auckland, 100k international students indirectly affecting buying, business-approved immigrants, basically Auckland is on an International market.
Then domestic investors who are not worried about interest rates as they have deductions plus capital growth with or without higher interest rates, domestic home buyers who will buy at 6% or 5% rates regardless.
Interest rates have quite some downside movement to go yet. Auckland will be ignored as a lesser concern than bankrupt farmers and households not spending.

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What happens if ZIRP becomes a reality? Will Aucklanders buy a whole street in Whangarei with their PPOR as security?

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At the rate things are going, there won't be anything left to invest in except for housing,

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That is what many overseas commentators are now saying. Cheap credit is now not working. the money is piling into non productive areas and creating bubbles the world over. now they are strong arguments to get some interest back into the system so that the money will flow into more risky productive areas.
also almost everyone now agrees the FED is behind the curve and should have implemented at least one raise by now

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Some certainly are as a side effect. Really QE is for me something that should have been nly used for a few years while the banks etc were nationalised and cleaned out and reset. that didnt happen so the very greed and incompetence that started this mess just kept on being piled on.

I also suspect that rather than QE, printing money into ppls pockets in the form of tax rebates would have been way more effective.

I am not aware any Keynesians say the Fed is behind the curve, indeed all the evidence/models says raising would be a disaster.

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They can't do that with QE because the injection of funds never cured the source of the problem, it only gave what is known in medical terms as a "honeymoon period". Which is very dangerous because it relieves the symptoms so the patient can rush out and repeat whatever caused the injury in the first place.

Debt and fiat money work on the idea that a unit of currency is what someone will trade for it. Which is _why_ the system collapses when productive sector is dwarfed by the government or capital sectors. That's why you can't have "free everything" because it doesn't return value to where the real costs are (ie the real productive system). Automation has reduced the labour content or real production but that is machine specialists so we have to sell more to support the specialist, in a world without currency of value, and we have to support the real cost of the machine IP and construction again without currency of real value.

Until that system is changed, and as long as the labour is undervalued the collapse is imminent. Not everyone can be rich, but everyone can be poor. Better not many poor who have a good life, and few super income people (dead wealth is worthless, it's growth of worthless income that is dangerous, it's whats inflating the system, whether it's local or foreign sourced).

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or euro reversible trouser bonds
https://www.youtube.com/watch?v=ASv3v4TBia0

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Auckland residential investors will be paying a lot higher interest rates than those living in their own home.
The RBNZ will see to that.

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