ANZ and ASB both announce new low 'special' rates for key terms. ASB's new low offers deserve attention

Both ANZ and ASB have kicked off the week with good home loan rate cuts of their own.

And because they are two of the heavy-weight mortgage banks, their rivals will be taking real notice.

The most interesting change comes from ASB (and BankDirect, and Sovereign).

All their changes are for 'specials' that require at least 20% equity "in the secured property". There do not appear to be any other conditions.

ASB have added a "new" six month 'special', of 4.99% and the lowest of all the main retail banks. Only the newly-arrived ICBC has a lower six month rate of 4.89%.

ASB has also added a "new" 18 month 'special' of 4.69% which is the market leading rate for this term. No bank has a lower offer at this time.

Their new 4 year 'special' is 5.29%, also the lowest of the main banks, but not quite as low as HSBC's Premier 5.09%.

And their "new" 5 year 'special' is now 5.39%, also besting every other bank bar HSBC.

These set new low benchmarks, especially for the challenger banks who often rely of 'rate' without conditions to separate themselves from the heavyweights.

Consequently, further rate moves down should probably be expected in this market.

ANZ's changes on the other hand are more timid.

They have adopted a 5.39% six month fixed rate, no where near as good as the new ASB offer for that term.

ANZ's one year rate is -20 bps lower than their old rate at 4.69%, matching ASB and BNZ. This is a very good rate, but not as low as the HSBC Premier offer.

They have sliced -40 bps off their 18 month rate to 5.15% but even after this sizeable cut, it is undistinguished among its rivals.

And their new 2 year rate of 4.89% suffers the same comparison, matching ASB's 'special' for that term, but all their other main rivals have a lower offer on the table.

Wholesale rates are still falling. They are low enough to support these new low rate offers, and allow borrowers to negotiate hard for below-card rates.

The mortgage market is all about haggling, especially if you have at least 20% equity in your property.

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 cash incentives are still there for some banks (including Kiwibank) and while we thought they might disappear altogether, they haven't and they are still worth keeping an eye on. You can see see the current non-rate home loan incentives here.

The new floating and fixed mortgage rates compare at 5:00 pm today (Monday) as follows:

below 80% LVR Floating  1 yr  18mth  2 yrs   3 yrs   5 yrs 
    % % % % %
6.24 4.69 5.15 4.89 5.59 5.79
ASB 6.25 4.69 4.69 4.89 4.99 5.39
5.99 4.69   4.69 5.19 5.65
Kiwibank 6.15 4.79   4.65 4.99 5.50
Westpac 6.15 5.39 5.39 4.69 5.49 5.79
6.20 4.89 4.89 4.79 4.99 5.59
HSBC 6.35 4.49   4.49 4.49 5.29
6.14 4.99 4.85 4.99 4.99 5.59
6.24 5.45 5.59 4.79 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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DO NOT FIX !!!!!!!!!!!!

Interest Rates look to come down even more before the year-end

China is about to lower interest rates , and global money is about to get a whole lot cheaper

I may be over-alarmist here, but just make sure that when you decide to Fix, you can afford the mandatory Review that will come along with that decision. When the bank is approached with a 'I want to do this..." it will run a 'new environment' microscope over your present situation, and your future one. I have a friend who has just inherited her mothers property, and she went to the bank to borrow the other half to buy out her brother. The answer? "Sorry. Your servicing capacity won't allow it" Now that's with 50% LVR and a current small mortgage.
My point is : You have to Fix when the bank's want you to, not when you do!

A simple rollover, or refix, or fix from float will not normally invoke a 'review' unless you are adding a topup or extra borrowing.
Although if we see GFC2 kick in soon then, yes, there may be some existing loans/borrowers reviewed with equity and servicing re visited under tighter criteria.

I'm sure you're right - today! And that's my point. People can 'hang on' until 0% if they wish. But if that day arrives, then the local economic markets are likely to be in so much turmoill that who knows what will be available to whom......
Who are banks? "People that give you an umbrella on a fine day, and snatch it back when it's raining", and to me it's looking a might black over them thar economic hills....

It would seem the Australian regulator has unleashed a torrent of misery upon the parents of our Aussie banks, which will leak to both bank creditors and debtors.

Part of that is an increase in average mortgage risk weights - meaning a rise in the amount of reserves the big four banks and Macquarie have to set aside to cover potential home loan defaults - to 25 per cent, up from the mid-teens now. Read more

17%, of say, 8% tier 1 regulatory capital translates to 1 dollar of bank capital for every 73.53 dollars of mortgage credit issued. The new regulatory demands equate with 50 dollars of extended mortgage debt.

It would be helpful to know how the local banks are placed and whether the RBNZ will be influenced by the situation in Australia, unless, of course, amendments associated with capital prudence have already been implemented. Necessary term depositor due diligence investigations give cause to the RBNZ to reveal the situation.

Necessary term depositor due diligence investigations give cause to the RBNZ to reveal the situation.

I second that.

Does this mean the ANZ are forecasting an end to the property boom?

maybe the banks are taking a harder line as they see the clouds on our economy and they are taking a more measured approach to their loan book

"Interest Rates look to come down even more before the year-end"

Are they? Depends on what part of the curve you're talking about - most pundits are picking long-term wholesale swap rates (4-5 years+) to hold or go higher if the Fed, as expected, raises rates starting next month.

Which is a discrepancy between the OCR chosen to support Main street and what banks can actually borrow at. So the NZ OCR looks to go lower by 50basis points maybe even 75, meanwhile the Fed comes off 0.25%? to 0.50%? which rationally seems hardly significant (now how financial parasites react is a whole new ball of wax).

No, you've got it wrong - the Fed isn't coming off - the Fed is looking to increase rates as the US economy is picking up.

So the Fed and RBNZ are going in entirely different directions.
This will steepen the swap curve as short term rates are more influenced by the domestic OCR whereas long-term rates are more influenced by off-shore wholesale markets.

Sorry to kill your bank-hating narrative.

bw. This situation is happening a lot since the Responsible Lending Code came in. Nothing to do with rate fix or review. Fix or Float? Those who promote floating the whole loan are costing their customers a lot in interest payments as there is now a 1.5% differential. Short term fix for most and float the balance to overpay like hell is the way to go, get rid of the debt.

There's two components to borrowing, Jeff. The price ( the interest rate) and liquidity ( the credit lines to actually be able to borrow).
Credit Line is about several things as well. Primarily, the capacity to repay ( can the loan be serviced) and collateral ( what have you got to secure the loan if it all turn to custard?)
If interest rates go to 0% but as a consequence asset markets have halved, how much will people be able to borrow if their collateral has also halved? ( that house that was, say, $1 million and had a loan of $700k against it is now worth $500k?). Not much, is my answer! And, I'll pretty much guarantee you that if you go anywhere near a bank to do anything at all with that existing loan, it will have a harsh spotlight thrown over it." Don't poke it and it won't bite you" will be the orders of the day....and if your 'stuck' on Floating, it might be better than having that spotlight shone on the loan....

According to Westpac a few months ago, the OCR is supposed to be 4.5 by now, with more rises on the way.
This has been a repetitive theme since 2009. What benefit has NZ received from an OCR which has been set too high for the last 6 years? The Auckland housing market is a lost case regardless, so it was a waste of effort trying to use the OCR to stem foreign buyers and speculation and finance flight.

So, still waiting on Westpac, always the slowest to go down.