ASB has today (Wednesday) dropped its fixed home lending rates marginally following the recent ANZ reductions.
The ASB reductions have made their six-month & four-year terms now the most competitive across the major banks, even if the advantages are actually quite small.
ASB has also dropped its 6-month and 9-month term deposit rates by 10 basis points each.
These reductions focus on the short end of the rate curve, a place that borrowers have recently joined savers in favouring.
With May the final real estate 'season' in the bank budget year where any significant market gains can be won, it is perhaps not surprising to see this competitive push at this time.
But new real estate transactions are in fact hard to find, so prospects don't look to flash on that front. But there is always the refi component of the market, and suggestions that rates might be lower in the future is helping those transactions being done at short fixed terms. Being competitive in this space is now crucial.
But the variations between banks are small, and no bank will want to lose a client with a solid financial situation. It should be a good time to negotiate. First check your online resources for below-card offers from your existing bank, and go from there. Carded rate offers are the high end of the range.
Moving to a challenger bank remains a real option to pick up even lower rates. But be careful with brokers; not all of them work with all challenger banks so they may steer you away from those options.
One useful way to make sense of the changed home loan rates is to use our full-function mortgage calculator which is below. Term deposit rates can be assessed using this calculator.
And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options. But break fees should be minimal in a rising market. They will become important in a falling market however.
Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at the moment.
| Fixed, below 80% LVR | 6 mths | 1 yr | 18 mth | 2 yrs | 3 yrs | 4 yrs | 5 yrs |
| as at May 8, 2024 | % | % | % | % | % | % | % |
| ANZ | 7.25 | 7.14 | 6.89 | 6.79 | 6.65 | 7.34 | 7.34 |
 |
7.24 -0.05 |
7.14 -0.10 |
6.89 | 6.75 | 6.65 | 6.49 -0.06 |
6.39 |
 |
7.29 | 7.24 | 6.89 | 6.79 | 6.65 | 6.55 | 6.55 |
 |
7.35 | 7.25 | 6.79 | 6.65 | 6.55 | 6.55 | |
 |
7.39 | 7.29 | 6.95 | 6.75 | 6.65 | 6.59 | 6.39 |
| Bank of China | 7.09 -0.10 |
6.99 -0.10 |
6.75 | 6.65 | 6.49 | 6.39 | 6.39 |
| China Construction Bank | 7.19 | 7.09 | 6.89 | 6.75 | 6.49 | 6.40 | 6.40 |
| Co-operative Bank | 7.29 | 7.14 -0.10 |
6.99 | 6.79 | 6.65 | 6.55 | 6.55 |
| Heartland Bank | 6.89 | 6.69 | 6.55 | 6.35 | |||
| ICBC | 7.19 | 7.05 | 6.95 | 6.85 | 6.59 | 6.49 | 6.49 |
 |
7.35 | 7.24 | 6.99 | 6.69 | 5.99 | 6.19 | 6.19 |
 |
7.39 | 6.99 | 7.19 | 6.75 | 6.65 | 6.59 | 6.59 |
Comprehensive Mortgage Calculator
16 Comments
too little to mean something I feel.
Not so.
Look at the graphs using a rolling average to smooth.
Once a peak is hit - the rates keep coming down.
We hit peak some months back.
I'd still take the 18 months given those rates. But I assume the shorter terms are more negotiable.
Yeah you should easily be able to get under 7% for one year from any of the major banks. ANZ has 6.85% for 1 year on the app this morning
ANZ really don't want you to fix long!
The carded rates are a joke. 6.85% for a year if you make any effort to negotiate.
It looks like they want to sucker you into an 18 month fix where possible.
as someone 'shopping' around at the moment the Heartland rates listed seem to be the best reference to actual rates
Insightful comments thank you David
What are "wholesale rates"? Those set by "wholesale funding"? It used to be that Aussie banks used wholesale funding to drive profits. For ex, borrowing from Japanese financial institutions at low cost and lending to the punters at higher cost than they could domestically.
Imagine if we could get all our funding like this. Basically borrowing at a cash rate set by the BOJ - 0.1%. The Ponzi would be the 8th wonder of the world.
Are Japanese banks allowed to do that?
If Aussie banks sell mortgage-backed securities to Japanese financial institutions, I don't see why not. It's essentially a carry trade: borrow low cost, lend higher cost for the Ponzi (while accepting currency risk).
Up to the GFC, there was an Aussie analyst called Brian Johnson at CLSA who was always harping on that wholesale funding would take down the Aussie banks. Never happened and they've just gone from strength to strength based on the seemingly robust property market.
Over the past 20 years a lot of our [mainly mortgage] money has come from Japan. I'd expect places like NZ to be paying a premium on the Jap OCR equivalent, but it's still pretty cheap money. For some strange reason the Japanese actually like us. They buy a lot of our fruit & we had a lot of men in J Force on the ground after Hiroshima & Nagasaki. I knew one who only recently passed away aged 98. He said that they always got on well with the local folk.
Over the past 20 years a lot of our [mainly mortgage] money has come from Japan. I'd expect places like NZ to be paying a premium on the Jap OCR equivalent, but it's still pretty cheap money.
There must be some central limits on wholesale funding and I assume it's related to required allocation of domestic deposits in banks' capital bases.
dp
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.