Quickly, the next bank to raise rates in ANZ's shadow is Westpac.
It has raised both home loan and term deposit rates.
Westpac's mortgage rate increases range from +14 basis points to +34 bps. That takes its one year fixed rate to 3.19% and two year fixed rate to 3.79%.
At these levels, Westpac is embedding in a 5 bps advantage over ANZ at the one year carded rate term, but is 9 bps less competitive than ANZ for two years.
Other banks, especially the main ones, are sure to follow soon. We will update this story when they do.
On the term deposit front, Westpac has added between +10 bps and +20 bps to all carded offer rates. Our term deposit rate change article has been updated to reflect the new Westpac rates.
One useful way to make sense of these changed home loan rates is to use our full-function mortgage calculator which is also 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.
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 October 21, 2021 | % | % | % | % | % | % | % |
| ANZ | 4.00 +0.45 |
3.24 +0.45 |
3.54 +0.45 |
3.70 +0.45 |
3.94 +0.45 |
5.04 +0.45 |
5.34 +0.45 |
 |
3.55 | 2.99 | 3.29 | 3.45 | 3.69 | 3.99 | 4.29 |
 |
3.55 | 2.99 | 3.29 | 3.45 | 3.69 | 3.99 | 3.99 |
 |
3.55 | 2.95 | 3.30 | 3.65 | 3.89 | 4.19 | |
 |
3.69 +0.14 |
3.19 +0.20 |
3.49 +0.24 |
3.79 +0.34 |
3.99 +0.30 |
4.29 +0.30 |
4.49 +0.20 |
| Bank of China | 3.45 | 2.69 | 2.89 | 3.09 | 3.39 | 3.65 | 3.95 |
| China Construction Bank | 2.99 | 2.99 | 3.29 | 3.69 | 3.99 | 4.29 | 4.39 |
| Co-operative Bank (*FHB only) | 2.99 | 2.79* | 3.29 | 3.60 | 3.89 | 4.14 | 4.29 |
| Heartland Bank | 2.35 | 2.60 | 2.90 | ||||
| HSBC | 2.89 | 2.69 | 2.89 | 3.09 | 3.29 | 3.59 | 3.84 |
| ICBC | 2.85 | 2.45 | 2.65 | 2.85 | 3.15 | 3.65 | 3.95 |
 |
2.89 | 2.75 | 2.99 | 3.15 | 3.45 | 3.95 | 3.95 |
 |
2.89 | 2.74 | 3.04 | 3.20 | 3.44 | 3.94 | 3.94 |
Fixed mortgage rates
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75 Comments
Those who have been reading Interest for a while know that I have been debating against house price drops over many years, I have been called a spruiker and worse. I do absolutely believe now, that house prices rises will come to an abrupt end in 2022 and that they will quite possibly fall
Well yes, but it would be nice to see that go both ways. I recall lots of dishing out to people who changed their mind about price falls because the RBNZ massively dropped interest rates. They didn't get plaudits for credibility. They got repeatedly dumped on for being wrong and being DGMs and a lot of other nonsense.
It does feel that way, rising interest rates, a halt to immigration and high building does seem like it could be the perfect storm. But I've learned to never bet against houses in NZ.
However people are reluctant to sell for lower prices than what they paid, so I wonder if the nominal prices could stay much the same, but with current inflation levels the real prices could still be falling by 5% per year.
Independent Observer
You are not in a position to be poking fun at Yvil. You admit you have been calling a bubble burst for seven years now and in that time house prices have more than doubled.
At the time of the onset of Covid you were calling a fall at the extreme end of 50% plus fall . . . what a gnome call was that.
A couple of years ago you said that you did not own a home and your comments suggest that you have not since done so. There is one big loser between the two of you and it ain’t Yvil.
Given your poor calling over considerable time, having not owned property, not having experience of mortgages, and burying your head by outright dismissing rather than critically analysing economists comments on the market and interest rates you are would seem the least informed commentator and less qualified on this site.
Yvil has made numerous calls on the market direction which have proved correct. To be calling a flat or even some correction given the current conditions is another good call . . . but all you are capable of is cheap shots which make you sound like a right royal Turkey. Pathetic.
IO
You are wrong yet again son; you posted early 2020 was that you had been calling bubble burst for over five years*. Embarrassing as it is, you put your self out there and in this instance holding Yvil accountable - so it’s also about your credibility. So stop trying to dig your way out.
Cheers :)
* Happy to dig the post out but currently on holiday in South Island.
Well, no one (ok, almost no one) could have predicted neither pandemic nor the way the Gov & RBNZ handled property bubble. What they say and what they do is quite often opposite, as well as it's quite contradictory to what one would think is good for the country.
So nothing wrong with being wrong on predictions really. Let's keep it to debate folks, and not ego-measurement contest.
Yvil, what's your definition of fall?
Well I suppose even 1% down is a fall but I think more importantly for a real fall to occur it needs to happen consistently over 3 months and across various measures (average, median & HPI).
How much is RE likely to fall in 2022? Logic says 20% is not unreasonable at all but then again, the RE market has made a mockery of logic for a while.
For me though, the main driver has always been interest rates, that's why I finally think the party is over
Exactly right, as inflation kicks in everything rises so I very much doubt we will see house prices drop. At best there will be slow to no growth in house prices BUT again its all down to the government isn't it, if they simply open the floodgates to foreigners with money and then its away we go again.
When things get tough, the price is not set by the vendor (the developer who has higher costs) but more by what the buyer can afford. If interest rates keep rising, the developer may ask higher price for his new build to cover his costs but he will end up accepting whatever a buyer can afford.
Yes there is of course the possibility of a major change in settings, (immigration, finance etc…) which could support the RE market yet against in the absence of any additional support I stand by my prediction of a flattening to a reduction house values up to 20%
You could be right.
But what a shocking cost to the economy and the future of New Zealand your 'being right' has witnessed.
Key knew what needed doing in 2007. Ardern did in 2016; both whilst on the campaign trail, only to see fear of political reality smother their beliefs when it came time to be courageous and act. (NB: Key had the GFC and The Earthquake to use as cover for what needed to be done, so avoid the blame. Likewise, Ardern had Covid. But both let good crises go to waste)
Will Ardern and Collins, together, have the courage to see us belatedly on a better course? As an eternal optimist - I hope so!
(NB: Collins knows she's a Dead-Duck - so she's got nothing to lose and everything to gain in a show of Statesmanship)
Well, you have been right in most of your calls in the past, and this has got to be acknowledged. I remember quite well how you went against "common wisdom" last year when we were in full panic mode due to the pandemic, and stating that house price rises were not off the cards; and gosh you were so right.
Expect mass pull back on spending, think twice before starting a business now.
Much needed artificial correction is here but for how long before RBNZ to drop the rates again to save everyone?
Feeling for the new investors, got to pay to learn how to play the game right? Hang in there if you can and see you in another 10 years or so when the cycle starts again.
wow 2 rate rises by Westpac in a week- looks like you have to be really quick these days to lock-in your rate.Its hard to believe 12 months ago we were encouraging people to wait for rates to go down below 2%.
The average 1 year rate is now the highest since Covid-19 began ie since March 2020
OK, quick back of the envelope calculation. Assume average household income of 100k. In 1987, the average house price was between 2-3 times average hh income. Assume 3x. Now, they are about 8x average hh income.
To buy now with a 20% deposit, you would need to save at least 1.5 times the average household income. Which means today a mortgage of 650k. If the person buying in 1987 had done that, they would have a mortgage of 150k.
At 21%, a mortgage of 150k is less than a mortgage of 650k at 3%.
So I think it's time to stop with the myth that things were so much harder then. If two households saved the same percentage of their income for the same amount of time before buying a house, the 1987 household would still have been better off despite interest rates of 21% (which did not last very long, in any case).
You cannot compare the two periods.
Fhb House ownership was significantly easier to achieve in the 80s.
Its not even close.
More to the point, leveraging yourself with debt back then has meant 20 years of credit induced growth as new players commit to ever increasing mortgages.
New buyers are now facing the risk of overshoot, is this the end of a long term credit cycle? There is no doubling every 7 years from here.
Not to mention new players now will have to wear the cost of climate action which are going to need to front up with shortly.
"Back in 1987 the average house price was NZ$88,900. The average pre-tax income was NZ$485.98 a week"
https://www.interest.co.nz/news/44330/opinion-why-golden-oldies-are-wro…
Interestingly, if you use individual rather than household salaries, you get pretty much the same result.
A $71,720 mortgage at 21% for 30 years is $576 per fortnight. (Or 59.3 percent of the average wage).
I couldn't find the average, but the median weekly earnings are $1093. A $640k mortgage (based on house price of 800K and 20% deposit) is $1245 a fortnight at 3%, or 56.9 percent of the median weekly earnings. And it doesn't look like rates will be at 3% for long. As soon as rates go over about 3.35, it'll be a worse ratio than the 1987 one.
oh yes..the days when she would greet one at the door, freshly made up and groomed, pipe and slippers in hand, the smell of a home cooked dinner, fire going, drink poured, paper at hand and ready to massage the feet while one relaxed after a hard day down the mine.
What the hell went wrong?
Repost of a reply to brisket who asked "how long the current rise in inflation will last?"
Yes it depends on how long higher inflation will last indeed. It's becoming clear that it's not as transitory as some thought. On the other hand I don't believe that inflation is about to return to its "long term average" because the current inflation is a result of 1) supply issues as you said and 2) monetary and fiscal stimulus, but current high inflation is NOT a result of amazing GDP growth. I believe that, when governments and central banks remove their stimuli, inflation will evaporate quite quickly, this will then lead on to lower interest rates again.
Since the GFC we have not fixed the economy at all, we have just made it "look good" with government and central bank interventions
When the Risk of doing business has been squeezed out of the price of money; interest rates, and into the price of art, cars, shares, Bitcoin and property etc. it doesn't mean that the risk has gone away - it means that those things now have all the risk that should have been reflected in the price of money in addition to the inherent risk always present in those items.
Now, as interest rates look to rise, the risk embedded in all things non-money is starting to become apparent.
Inflation, has already happened. It's embedded in most of the capital prices we see today. The CPI (for what it's worth) is just a last gasp of the process.
The risk, now, isn't that interest rates might rise per se, but that wholesale avoidance of risk takes hold everywhere else. And that means - wholesale liquidation of non-money assets, to try to ''get-out of risky assets" before returning risk to where it should have been all along.
Interesting times ahead of us.....
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