In its drive to grow its home loan business, BNZ now offers two very low rates, leading the market down and undercutting rivals by at least 20 bps

In its drive to grow its home loan business, BNZ now offers two very low rates, leading the market down and undercutting rivals by at least 20 bps

BNZ's push for an expanded share of the mortgage market just became very aggressive.

The bank has unveiled a -30 basis points cut from its previous 4.99% two-year rate to 4.69%.

We think this is the lowest home loan rate for any term for a very long time. Some six month rates reached 4.85% in late 2012 and into 2013, and there have been rates this low for other terms since then. But no home loan rates have been this low since at least 1964 when the earliest RBNZ data is available.

Their new rate is now the lowest of any offer, trumping SBS Bank's 4.85% 18 month offer.

It is available to BNZ customers who have at least 20% equity in their property and who have a BNZ transaction account with salary or wages credited to the account.

BNZ is the one main bank who have the lowest market share in residential mortgages. They recently stated they would like to get their mortgage lending back up to levels their main rivals have achieved. They have abandoned their 'no-broker' position and are now driving to their goal with a low rate strategy.

Not only is today's two year rate miles below their competitors, they also have the lowest floating rate by a significant margin, using their Total Money product.

Supporting low rates, the wholesale swap markets are falling as well and are likely to fall further when they open this morning following significant reductions in New York in benchmark yields on Friday.

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

Almost all home loan competition is now back focused on the interest rate. Non-rate incentives have essentially dried up although there are still some worthwhile but targeted incentives available. You can see see the current non-rate home loan incentives here.

The new floating and fixed mortgage rates compare this morning as follows:

below 80% LVR Floating  1 yr  18mth  2 yrs   3 yrs   5 yrs 
    % % % % %
6.24 4.89 5.55 4.99 5.59 5.79
ASB 6.25 4.89 5.25 5.10 5.39 5.65
5.99 5.19   4.69 5.29 5.75
Kiwibank 6.15 4.89   4.99 5.39 5.60
Westpac 6.15 5.39 5.39 4.89 5.49 5.79
             
6.20 4.89 4.99 4.99 5.20 5.59
HSBC 6.60 4.89   4.89 5.29 5.60
6.14 4.99 4.85 4.99 4.99 5.59
6.49 5.45 5.59 4.99 5.40 5.85

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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13 Comments

Better to wait a few months for a 3.99% rate

I bet BNZ won't give you a cash contribution.

In any event I'm only paying 5 bps more than that for the same term - drew down last week.

Hi Zoltuger, Who was the bank that you are refereing to? and how much is the morgage?

I can't speak for Zoltuger. But in April/May, before the first of the two decreases in the OCR...

BNZ offered me 5% for 2 years, with $4k cash contribution to switch

My existing bank offered me the same rate and term, with a $2.5k cash contribution to stay with them.

I chose to stay, given the switching costs and not wanting to get lawyers involved etc.

But given there have been 2 interest rate cuts since then - hope this information helps.

(and the mortgage is around the $400k mark).

Chhers jay

4.99% is a great rate for 5 year term fix forget no worries !

It could lower but watch out for swap rates that is where the danger lurkes.

I predict the 6 month rate at 3.50/4.50 by Dec it all depends on how low swaps rates go.

I managed to get 5.6% variable today on $2M with $11k cash contribution. Went floating as I'm picking mid-Sep will provide some better fixed rates. Hoping to split into three terms of 1,2, & 4 years but average around the 4.5% mark over the total borrowing amount. Which bank is mostly irrelevant but proves that the big boys are all hunting for market share. D

Actually, that 5.6% is yet to reflect the 0.25% drop from last week so really it's 5.35% variable. D.

So you got cash back of 11k on a variable rate how do the bank lock you in? normally it's a fixed rate and if you leave before the term its refundable. What's stopping you taking the 11k and next month switching banks?

The bank makes you sign a bit of paper that says that you'll repay the 11k if you switch within 2 years.

I have $1.4m coming off 6 mth fixed rate of 5.3% in Sept. Currently with TSB, but will most likely
shop around this time looking for some cash incentives
May even consider floating short term depending on the timing of any OCR cuts ?

Yes that bit of paper they make u sign is now with most banks, I was under the impression that after fixing for a year I will jump ship and get some $ from another bank but after reading my contract again realised if I leave the bank I will have to pay back the cash incentive. So technically I am locked with the bank but not locked with the rate...that's ok I guess:)