Westpac is cutting its advertised, or carded, four and five year home loan rates to fresh market lows.
The bank says, effective tomorrow September 21, its four-year rate will drop 21 basis points to 5.99% from 6.20% and its five-year rate will be cut 61 basis points, also to 5.99%, from 6.60%.
The new Westpac four-year rate is the lowest one of that duration advertised by a bank and the new five-year rate is level with SBS Bank.
Westpac general manager for retail, Gai McGrath, said the 61 basis point cut is for a limited time and is aimed at giving customers the option of long-term certainty.
"It is an opportunity for us to provide some more choices for customers who are looking to get more certainty in the longer-term," McGrath said. "So given where things are at, and some signalling from the Reserve Bank around interest rate tightening, we just felt there's a real opportunity with a gap in the market really."
She said Westpac was now the only (major) bank with all its advertised fixed-term rates below 6%, SBS also has all its rates under 6%. Westpac's floating, or variable, rate remains 5.6%. See all advertised bank home loan rates here.
McGrath said that Westpac continues to see about a 50-50 split between customers choosing to fix mortgages and those going for floating rates, with the bulk of fixers going for shorter durations. There had also been an increase in customers' choosing a combination of both options.
"In recent times a lot of the customers interested in longer-term (rates) have been staying on floating, watching the market. What we believe is by offering our highly competitive rate in the (longer-term) space you're giving some choice for customers who also really would like a bit more certainty about what their borrowing costs are going to be over the longer-term," said McGrath.
Westpac's economic forecasts were still predicting the Reserve Bank will start increasing the Official Cash Rate from its current level of 2.5% from the latter half of next year.
"Today's GDP figures, we believe, still indicate we think that's where the Reserve Bank is at," added McGrath.
June quarter Gross Domestic Product rose 0.6%, according to Statistics New Zealand, ahead of most economists' forecasts for 0.3% to 0.4% growth.
"It's a question of whether or not the steepening happens as rapidly as we currently are forecasting, - depending on the situations we've got going on in Europe and obviously with the exchange rate. Although our view is the Reserve Bank has less of an appetite to be involved in exchange rate issues. From our perspective the main thing is for customers who are looking for certainty to know that they can get that," McGrath said.
(Update adds further comments from Gai McGrath, & clarifies Westpac is the only major bank with all its advertised fixed-term rates under 6%, not the only bank).
------------------------------------------------------------
Mortgage choices involve making a significant financial decision so it often pays to get professional advice. A Roost mortgage broker can be contacted by following this link »
------------------------------------------------------------
No chart with that title exists.
15 Comments
Sub 6% 5 year rates are seldom available, so it is an opportunity to lock in (perhaps up to 50% of your mortgage) at this rate.
It is by no means certain that the outlook for interest rates will remain low over the medium term, as rising economic activity and a booming housing market will be impossible for the Reserve Bank to ignore.
"Sub 6% 5 year rates are seldom available, so it is an opportunity to lock in (perhaps up to 50% of your mortgage) at this rate."
I'm sure thats what the americans, europeans, japanese, and other parts of the world printing money thought to. Until ZIRP or NIRP happened :)
Not saying you're wrong about possible inflation happening, just that it could equally go the other way yet.
I think you've made a great point there. There is a lot of sense in setting and forgetting. Instead of wasting time surfing this website you can focus on being more productive and boosting your income.
Also you might manage to squeeze a little more blood out of that stone too. I got 5.69% for 5 years.
It was Westpac ( I see they've lifted there long term rates back up now). Thank goodness I signed the rate lock agreement earlier this week.
I think it was just good timing, a pliable manager and a little negotiation (use a mortgage broker as an implied threat, you can negotiate a better DIY deal as there is no commission for the bank to pay).
The way short term fixed rates a plummeting it may not be that great a deal. But I'm betting the economy will pick in a couple of years.
America off the fiscal cliff, China hard landing, Euro implosion :- I fixed for a year because I'm holding out for NZ to start dropping the OCR down to 1% or below to stimulate the economy in the face of the global downturn, and to lower the $NZ. Banks to follow suit with even lower mortgage rates.
Will the bears have it? Time will tell...
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.