The Red bank falls into line with a two year home loan offer that matches most other major banks, ends one year 'special', raises capped rate

Westpac has changed two key home loan rates this morning.

It has removed its one year 'special' of 5.95%, reverting to its standard rate of 6.09% for this fixed term.

And it has joined with most other banks offering a two year 'special' fixed home loan rate of 5.99%.

At the same time, it has increased its one year capped rate to 6.74%, a rise in that offer of + 0.25 bps.

The two year 'special' come with the conditions. These include

- a minimum of 20% equity,

- and salary credit to a Westpac transaction account,

- plus a Westpac credit card..

Westpac's special fixed interest rates can be accessed in conjunction with their up to $3,000 cash incentive offer but cannot be used in conjunction with any of their other home loan offers or discount packages, including previously negotiated offers or legal fee contributions.

BNZ is now the only main bank with a two year offer above 6%. (BNZ's focus is on their three year 6.25% rate which has a significant rate advantage over their main rivals for that term.)

On Friday, wholesale swap rates fell sharply, which will tend to help banks fund and justify lower home loan rate offers.

Mortgage rates in the one to three year range are generally soft at present, and we have seen renewed rate competition in this zone since the last Reserve Bank Official Cash Rate hike late last month.

With a pause signaled by the central bank on more hikes until after the election and falling international bond yields, the New Zealand swap markets have been reflecting these shifts and the cost of funds allows banks to offer sharper rates.

No doubt, the Reserve Bank will be somewhat frustrated with the direction of the wholesale markets, but relatively happy that the price heat seems to be going out of the housing markets especially in Auckland and Christchurch.

Non-rate inducements are now growing in importance, especially cash incentives.

Banks bundle these incentives when they negotiate so borrowers will need to be careful and clear of their objectives in these discussions. Use a mortgage calculator that displays the full cost of your loan when you are making these assessments.

See all banks' carded, or advertised, home loan rates here.

This is how the updated mortgage rates compare as at 7:00 am Wednesday, August 6, 2014:

below 80% LVR 1 yr 18 mths 2 yrs 3 yrs 5 yrs
6.05% 6.25% 5.99% 6.65% 7.15%
ASB 6.09% 6.30% 5.99% 6.65% 6.99%
5.99% 6.25% 6.09% 6.25% 6.99%
Kiwibank 5.99%   5.99% 6.65% 6.95%
Westpac 6.09% 6.30% 5.99% 6.65% 6.99%
Co-op Bank 6.00% 6.00% 6.00% 6.25% 6.89%
HSBC 5.85%   5.85% 5.85% 6.99%
5.85% 5.99% 5.99% 5.95% 6.79%
6.00% 6.05% 5.99% 6.60% 7.00%


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 »

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The word on the street in the mortgagebelt is: don't sign any home loan that starts with a '6' - that's too expensive.