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Challenger bank cuts a key mortgage rate making it the lowest for any term in the New Zealand market - at present

Challenger bank cuts a key mortgage rate making it the lowest for any term in the New Zealand market - at present

Hard on the heels of the majors adopting a 4.89% one year rate, a challenger bank has pushed mortgage rates even lower.

SBS Bank has set their 18 month 'special' at 4.85%.

This is now the lowest home loan rate available from any bank in the New Zealand market.

SBS Bank also has the lowest carded offers for 3 years and 5 years as well.

SBS Bank rates are also available from sister brand HBS Bank in the Hawkes Bay.

The 4.89% rate offers are still the lowest 1 year rates and they are available from ANZ, ASB and Kiwibank

Most banks have settled on 4.99% for their two year rate offer. Update: Westpac has now also adopted4.89% as their two year special.

The whole mortgage market is settling into a downward trend and this is likely to continue.

The next RBNZ OCR review is on July 23 and wholesale markets are pricing in more rate cuts from the regulator over the balance of 2015. Some see multiple 25 bps cuts.

Although they are not the only influence in setting home loan offer rates, wholesale swap rates do set the minimum cost limit, and these wholesale benchmarks have been falling quite markedly recently. You can track their movements here.

Global uncertainties and those recent signals from the Reserve Bank have both built a sinking tone into New Zealand interest rate markets.

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

Almost all home loan competition is now back focused on the interest rate. Non-rate incentives have essentially dried up although there are still some worthwhile but targeted incentives available. You can see see the current non-rate home loan incentives here.

The new SBS Bank fixed mortgage rate will compare as follows on Monday morning:

below 80% LVR  1 yr  18mth  2 yrs   3 yrs   4 yrs   5 yrs 
  % % % % % %
4.89 5.55 4.99 5.59 5.75 5.79
ASB 4.89 5.49 5.10 5.39 5.75 5.65
5.19   4.99 5.29 5.65 5.75
Kiwibank 4.89   4.99 5.39 5.75 5.60
Westpac 5.49 5.49 4.89 5.59 5.75 5.79
             
5.15 4.99 4.99 5.35 5.55 5.69
HSBC 4.95   4.95 5.40 5.50 5.60
SBS Bank 4.99 4.85 4.99 4.99   5.59
5.45 5.59 4.99 5.40 5.85 5.85

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8 Comments

Good short term fixed rates for homeowners and mortgagors.
However, the floating rates are looking increasingly expensive by comparison.
Still, It may pay to stay floating for a while so borrowers can take advantages if yet lower fixed rates later in the year.

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Given the prospect of depositor bail-ins looming large in the bubble ridden Auckland residential property market, I suggest an approach a little less accommodating than cutting interest rates on higher sale values. Widening the net to those that inevitably cannot pay is less than prudent.

The template of over-indebtedness as a response to soaring obligations is scale-invariant, and it always ends the same way: default, more financial tricks to mask the default, and eventually, insolvency, bankruptcy and massive losses being distributed to everyone foolish enough to choose financial trickery over dealing with reality back when the pain would have been bearable. Read more

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Actually it doesnt "end the same way" (or indeed anything/one else) for a country provided the downturn is replaced with an upturn ie your income / revenue recovers. At that point then the excess income is or should be used to pay down debt, which Dr Cullen did and infact also started teh Cullen fund to cover excessive numbers of BBs retiring) Of course almost invariably a right wing Govn gives tax cuts eg natioanl, instead of bracing itself for the coming downturn which porks property markets as we can see from 2008/9.

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NZ wage earners from Q1 1971 (quarter before Nixon exited the Gold Standard) until Q1 2015 have endured a 94.9% decline in purchasing power. View RBNZ inflation calculator

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Consumed by bureaucracy?

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Lowering mortgage rates from here is adding to The Risk that the RBNZ is so desperately trying to mitigate.
"If you borrow money without cutting expenses, the interest on the borrowed money piles up and you can't pay that, either. Then not only do you have a spending crisis, you have a debt crisis, and so do those who lent you the money."
http://charleshughsmith.blogspot.co.nz/

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a) and as Greece shows cut you public spending with severe austerity and you collapse GDP by a factor of 1.5 (for every $1 you save your govn income declines $1.50) , so its self-defeating.

b) What his comments ignore is if (when) your economy recovers, GDp increases so does you Govn income, you then use this 'excess" to pay down the debt.

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GDP is a terrible measure of economic health and wealth and it certainly doesn't deserve the high profile......It is like looking over a businesses books and focusing only on the income and forgetting the expenses!!

Government spending is a luxury item! Too many people especially in the cities think Government spending is an essential and have become reliant on it which distorts the economy further....because they keep making more demands.....if you don't believe me show me the city that can survive on its own!!.....

Self-reliance is the best attribute and one so much so that it is the concept that is entrenched within constitutional frameworks......Greece will have to some austerity and how they now balance that austerity with human rights issues is gong to be interesting!! Wealthy Greeks who could assist via investment get driven out by hideous tax laws, costs and compliance and that is one of the nice things about global trade etc if your Government or the citizens keep getting out of line those businesses can transfer to other countries where rules and regulations are not so smothering.

Socialism and the attitude that goes with it will destroy a country in the end because the greedy, foolish, ignorant people make enormous demands from a minority in SME producer types.

The traditional way of getting an economy to recover is via the Government mechanisms of inflation and you are wrong if you think debt is paid down........and where the hell is all the excess income coming from this time?

Governments around the world have completely screwed their populace over but it was the majority populace demanding all the social spending.....it is people looking over the fence thinking the grass is always greener in another person's patch demanding a chunk of what they think someone else has!!

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