Just as the RBNZ is about to raise the OCR again, fixed rates for home loans continue their falls. Now no bank has a one year rate over 5%

It's now less than a week until the Reserve Bank (RBNZ) next reviews its Official Cash Rate (OCR), and almost certainly, raises it by 50 basis points to 3%. By the end of 2022, markets are pricing the OCR to be just about 4.0%.

But, fixed interest rates are still going down. More institutions cut rates Thursday, and these are on top of a range of rate cuts in the past few days.

Some of those changes just meet the market of rivals' prior cuts. But some also take levels to new recent lows, especially by challenger banks. The challenger bank cuts are primarily a reaction to earlier main bank cuts, restoring their rate advantages.

The overall effect is to reduce the market level of fixed home loan interest rates.

It is hard to see how the RBNZ would be happy about this new track, as it isn't the signal they are trying to achieve with OCR rate increases.

They are likely grumpy with the market moves especially because most of them are in the one to three year fixed rate terms, right where the main refinancing and new home loan activity tends to be focused. Perhaps a saving grace is this is the dead of winter when overall market activity is low.

But the normal spring real estate selling season starts in early September, and kicks into a higher gear from Mid-September onwards. This year a lot will depend on the status of the new 'buyers market' and whether that will still be around in spring. It looks like it will. For rising resale transactions that usually come in spring, that in turn will depend on how realistic sellers are in "meeting the market" (or code for accepting lower prices.) If sellers are prepared to sell and volumes rise normally, then lower mortgage interest rates will genuinely undermine the signals the RBNZ is trying to send.

The wholesale swap rate markets then become influential. If they respond to offshore market signals by leaving rates on a declining track, especially for one, two and three year maturities, the RBNZ will need to work extra hard to push against that trend to justify its rising OCR.

Watch local inflation rates (next revealed on October 18) and the jobless rate (next revealed on November 2). The RBNZ has OCR reviews on August 17, October 5, and November 23.

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 although break fees should be minimal in a rising market, they will start to bite in a falling 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 August 11, 2022	%	%	%	%	%	%	%
ANZ	5.15	4.99	5.29	5.45	5.69	6.85	6.95
	5.15 -0.20	4.99 -0.26	5.29 -0.36	5.45	5.69	5.79	5.79
	4.99	4.95	5.49	5.39	5.69	5.89	5.99
	5.45	4.95		5.45	5.89	6.05	6.29
	4.99	4.95	5.29	5.45	5.69	5.99	6.09
Bank of China		4.85 -0.14	5.09 -0.20	5.19 -0.10	5.39 -0.30	5.59 -0.30	5.59 -0.40
China Construction Bank	4.99 -0.36	4.95 -0.40	5.29 -0.36	5.45	5.69 -0.30	6.85	6.85
Co-operative Bank [*FHB special]	4.99 -0.10	4.89* -0.10	5.39	5.39	5.69 -0.20	5.79 -0.26	5.89 -0.30
Heartland Bank		4.79 -0.21		5.29	5.39
HSBC	5.04	4.89	5.09	5.14	5.39	6.09	6.19
ICBC	4.99	4.79 -0.20	5.15 -0.24	5.15	5.69 -0.20	5.89 -0.20	5.99 -0.20
	4.95	4.89 -0.26	5.35	5.29 -0.10	5.49	5.79 -0.30	5.79 -0.46
	4.89	4.85 -0.15	5.19	5.29	5.59	5.69 -0.20	5.69 -0.30