Last week we had a flurry of mortgage rate changes.
Most were hikes to fixed rates, but we also had a hike to a floating rate by one major bank.
So it is a good time to review where we start this week.
We don't expect any lull in mortgage rate changes this week - some banks have some catching-up to do.
But before that, there is a brief window of opportunity to lock in 'older', lower fixed rates.
Among the main retail banks, there is now a 20 bps spread between those offering 1 year fixed rates.
There is a wide 76 bps spread at 18 months.
There is a 30 bps spread at 2 years, and an even wider 80 bps spread at three years.
For four years, the spread is 50 bps, and for five years it is 51 bps.
We would expect these ranges to narrow to less than 30 bps when this rate cycle settles down, as it inevitably will.
Standing out at present are these rates:
The 4.19% offers by Kiwibank, HSBC and TSB Bank, which are options in the one to two year terms that currently look attractive.
The 4.35% offer for three years fixed by SBS Bank looks good too.
The five year 4.89% at Westpac is another tempting option, but may not last very long at all.
And TSB Bank's ten year 5.75% fixed rate offer should be considered by borrowers who have thought through the implications of fixing for a long period.
It seems likely all these 'stand-outs' will be under review, and the longer ones (two years plus) may only be available for a brief period this week. But we don't have any special inside knowledge of any bank's impending changes; our comment only flows from watching the steady rise in background wholesale rates.
And don't forget that banks that are not now the most competitive in our rate-card lists may in fact offer you market leading options to win or retain your business. However their enthusiasm for sharpening their pencil will largely depend on the strength of your financial position. Sometimes a mortgage broker can be useful when it comes to the intense negotiating process.
(CCB = China Construction Bank, which is not listed in our table below.)
Offer rates are one thing, but borrowers should be aware that banks assess servicing capability by applying a higher rate - either +2% above the current market rate, or 7% (sometimes 7.25%), whichever is greater. It is in no-ones interest for borrowers to stress themselves to the max at the start of a long term mortgage commitment. In a rising market, these serviceability standards will be more prominent in the application process.
See all banks' carded, or advertised, home loan rates here.
A snapshot from the key retail banks is:
| below 80% LVR | 1 yr | 18 mth | 2 yrs | 3 yrs | 4 yrs | 5 yrs |
| % | % | % | % | % | % | |
 |
4.25 | 4.89 | 4.45 | 5.15 | 5.29 | 5.45 |
 |
4.29 | 4.45 | 4.49 | 4.79 | 5.19 | 5.39 |
 |
4.29 | 4.99 | 4.45 | 4.65 | 5.29 | 5.45 |
 |
4.19 | 4.29 | 4.65 | 5.10 | 5.20 | |
 |
4.25 | 4.95 | 4.29 | 4.49 | 5.09 | 4.89 |
 |
4.39 | 4.45 | 4.45 | 4.79 | 4.99 | 5.19 |
 |
4.19 | 4.19 | 4.19 | 4.49 | 4.79 | 4.99 |
 |
4.25 | 4.29 | 4.29 | 4.35 | 4.90 | 4.99 |
 |
4.25 | 4.35 | 4.19 | 4.59 | 4.89 | 4.99 |
In addition to the above table, BNZ has a fixed seven year rate of 5.99%.
TSB Bank offers a fixed ten year rate at 5.75%.
2 Comments
Going to take years still, many people have fixed long term contracts. Fortunately I had a term investment for 3 years that carried through the low rates so its looking up now for those who can save. Never going to please everyone, you just have to make the most of what you have.
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