National and ANZ joins KiwiBank, ASB, Westpac, TSB with fixed mortgage rate cuts, but leaves floating rates unchanged and below fixed rates. Fixed vs floating? Your view?

National and ANZ joins KiwiBank, ASB, Westpac, TSB with fixed mortgage rate cuts, but leaves floating rates unchanged and below fixed rates. Fixed vs floating? Your view?

National Bank and ANZ announced cuts in their fixed mortgage rates on Wednesday night right across the range from 6 months to 5 years, joining similar cuts announced in the last week by KiwiBank, Westpac, ASB and TSB.

BNZ followed up with cuts of 10 to 60 basis points across their range of fixed mortgage rates on Thursday afternoon.

National and ANZ cut their 6 month rate to 5.75% and its 1 year rate to 5.79%. It set its 18 month rate at 5.99% and its 2 year rate at 6.09%.

They cut their three year, four year and five year fixed mortgage rates to 6.45%, 6.85% and 7.25% respectively.

However, National left its main floating rate on hold at 5.74%, below its fixed rates. ANZ also left its floating rate unchanged.

Most borrowers are still choosing to float rather than fix with the Reserve Bank expected to leave the Official Cash Rate, which has been the base for floating rates, on hold until the middle of next year.

Meanwhile, BNZ has introduced a 30 month fixed-term rate of 6.10%. It cut its 18 month Classic home loan rate to 5.99% from 6.20% and cut its 4 year rate by 60 basis points to 6.85%. It left its TotalMoney variable home loan rate unchanged at 5.59%.

Most economists expect the OCR to be raised from the current record low of 2.5% from mid 2012 to around 4% in the following two years, implying a rise in floating rates of around 1.5% points over the same period. However, those forecasts rely on a rebound in economic growth in New Zealand, thanks largely to a successful Christchurch earthquake rebuild, and only a mild downturn in the global economy.

A slower Christchurch earthquake rebuild and slide into recession globally could see the OCR stay lower further into 2012, or even fall. Reserve Bank Governor Alan Bollard has said there is room to cut the OCR if necessary.

See all bank mortgage rates here.

See our article on ASB's and TSB's cuts from yesterday.

See our article on KiwiBank's and Westpac's cuts last week.

This tool may help with the question of whether you should consider fixing at this time.

(Update adds BNZ's new 30 month rate, cuts to all BNZ's fixed  rates).

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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"National cuts fixed interest rates", that's a bit cheeky during an election campaign Bernard! 

I'd be fixing now and probably for a three year term.

My bet would be on credit going pear shaped within 18 months, likely sooner (perhaps alot sooner) and floating rates are going to take off - big time.

Given the options are as close as they are now - fixing gives certainty of outgoing at much the same rate as someone on floating has been paying for the last year or so.

So, if it's affordable at that rate - fix it.  And if there is a balance on a credit card, add it to the mortgage while making the changeover.

Time to dig in so as to be able to weather the storm.

 

 

Not likely Kate.

Greece will more likely vote to dump the bailout (why accept austerity when you can just default?). 

Hence the rest of the PIGS will eventually default too and everyone knows it. 

To prop everything up money will be printed like there's no tomorrow.

Interest rates will bounce along the floor for the next decade never getting off the ground.

Remember we've got a Bernanke not a Volcker at the Fed, and anyway inflation is not just dead, it's buried under a mountain of debt.

When banks start to fail, those paper notes may even prove a good investment when the fed introduces negative interest rates!!

Remember 6.5% for 5 years and 5.9% for 3 years in Feb 2009 looked good!  But you would have done better on the floating!! (I broke all my 3 and 5 year fixed from Feb 2009 just after the Feb 22 earthquake and returned to floating).

Always seems to me that once the majority are on one side of the ledger, the banks "fix it" such that that becomes the losing side.  It's this kind of talk that caught my attention;

http://www.interest.co.nz/news/56410/bnz-ceo-andrew-thorburn-says-banks-likely-hike-floating-mortgage-rates-even-if-ocr-stays

'Decoupling' - sounds like a new buzz word (excuse).

I hear what you say about more money printing, but like that of the past, it'll go into a 'black hole' - not into consumer lending.  And then we've got Bernanke telling everyone he's outta bullets - and the Chinese looking like they aren't inclined to 'help' - does that mean they plan to buy up 'hard' assets as opposed to gov't paper.

I just don't see the extend and pretend continuing to work for another three years.

 

Chris J...   I would say inflation is alive and kicking....  Take USA ... even with their subnormal growth they have 3.8% inflation.

In a weak economy, with very subdued wage growth and consumer demand....3.8% inflation is meaningful.

I think u are right about Bernanke and his ways....  He will keep interest rates low in the face of inflation.....  In fact I don't believe that Central Bankers are that commited to controlling inflation....( CPI inflation )  

They are more concerned with liquidity..... and Growth.

As far as interest rates are concerned....   A decade is a long time....  But I do agree that Centrl Banks will try to Manipulate a low interest rate environment....    What the mkts will do..??   Who knows..?

Even the head of the BNZ is saying that he expects his wholesale funding  to become more expensive..???

cheers  Roelof

What happens if Greece does default (anyone??)?

Does the creditor get to own Greece or take the assets of the government?

Or do they just get away with it and no one lends them any money or gives them any credit for a few years till everyone forgives them?

They get to walk away from the debts WAS. The argument is they will face an awful terrible disasterous future...bollocks. They will be free to trade with the emerging markets and quickly rebuild their own currency value as they will be 100% debt free....You can judge this by the screaming coming from the banks that stand to collapse across Europe and the US.

The Greeks will need to boot themselves up the bum to get the tax system working without the engrained rorts and scams...

So the creditors dont get to own any of the greek assets? No mortgagee auctions of greek assets?

Nope...all they get is a Greek Pompom to chew on.

Think people are a bit wary of fixing  -  esp if they got caught exiting with break fees in 2009/2010.  So one eye on globad problems causing rate rises and one eye on the low floating rate right now...    maybe wait ....

I have always  believed that if interest rates are less than 7%  for 3 to 5 year terms then its time to grab them. There is as much danger of being `greedy' with low interest rates as there is with high rates. 

 

Banks aren't dumb. They do an analysis, a 'what if' before they do anything, especially cut lending rates. So they will have calculated what the impact of a cut will be on their bottom line; how many people can be expected to take up the offer and what is going on the the wider economy. And the banks are...still cutting. Ask yourself: Who's longer term interest is a cut in mortgage rates in? Yours...or the banks? And I suggest to you...it's not yours.

A lot of people are still waiting for there 8% fix loans to end.This would free up a lot of money an give the property market a bit of a nudge.

The country needs people spending money,everything else falls into place.

The new house loan rate should be around 6%,keep it there.

Just makes sense to start another building boom.

Full employment an no excuses

What are we waiting for.

c u

Thing is elite, any boom has to come from a savings base and not cheap credit...unfortunately Bollard does not agree..he thinks cheap credit is the answer.

Word is that the govt plans to cut gst on all buildings material to 10% post the election....they have come to understand their 15% gst level is killing the Goose in a critical sector.

The number crunchers have models showing total tax take resulting from a cut would be greater than cutting the current revenue. Labour picked fruit and veg as a vote winner...National have discovered building materials are the critical component in the economy.

This cut to gst has more positive upside than Bollard's cheap credit gambit. But it needs to be balanced with greater restrictions on the loan to value rates the banks can flog credit at.

And what does cutting the cost of bulding do to existing houses ?... makes them comparatively more expensive than a new-build. Those who own a property they don't need had better get it moved on before a 33% cut in GST arrives, otherwise they will find their 'asking prices' another 33% out of market....Oh...and rents will be lower too, as the cost of entry to a new-build will alter the calculations...lower...for a new renter! Looks bleak out there for second-hand houses....

What's worse is how the public have woken up to this potential bomb going off and they are backing away from doing the reno work and the new builds...explains the awfully low rebuild activity going on in chch.......GST cut 33% on all new builds and all reno materials including labour costs.

Finally somebody in the Beehive has come up with a positive pathway to a better future.

But we all know 'they' need more cash to keep 'us' afloat. So how about shouting: "GST cut on building materials !".....and as quietly as possible... " land tax brought implimented in a fiscally neutral way"

Sometimes you have to look back in order to move forward  isnt this what is happening today?my parents were paying 7% on an AMP farm mortgage in the 60's . dairy payout was much less than now but costs were minimal. No contractors were employed apart from a haybaling contractor and occasionally  an  electrician. They farmed without an overdraft and were able to save cash. In those days farmers often had 70/80 % equity when buying land. Then came the drive for expansion and see where it has got the world!  

Government won't cut GST on anything - why should they?  National talk about decreasing bureaucracy not increasing it.  I agree rates should stay low though.  We have just fixed 3 mortgages for 1 year with Westpac.  Banks want customers to fix and tie them in rather than float around as it is really easy to move nowadays as long as you have the collateral and capacity to pay your mortgage.

First let's begin with the two critical words you stuffed in there frazzy..."Banks want"....the dimwits in NZ have yet to realise that all economic policy hinges round that phrase!

Now to your "won't cut" comment....and the "why should they".....the why is so very clear to see...National will have just three years to keep Labour out in 014....they can either pork immigration or adjust gst pretty dam smartly to boost building activity that was expected to happen in chch. The chch rebuild bonanza has turned out to be an insurance red tape bungle that hasn't stopped shaking....so what's to replace it?....an immigration wave of big spenders would do the trick...but the other option is to pork activity and since Bollard's near Zirp has failed to do that trick( but has made the banks fat with profits)...all that's left is to spin a 33% gst cut on all building activity and supplies.

It stands to reason this is a very real prospect especially when you look at the share price of the materials suppliers.....!and the decline in consents......and the govt facing defeat in 014.

FYI updated with BNZ's fixed mortgage rate cuts across the board

Details in our rates comparison table

http://www.interest.co.nz/borrowing/mortgages

cheeers

Bernard