ASB has matched BNZ by offering a one year mortgage 'special' at 4.35%.
It has also cut most (but not all) other mortgage rates, both 'specials' and standard carded rates.
It's six month rates however are unchanged, as are their 18 month rates.
However their one year standard rate has been reduced by -20 bps to 4.85%.
Their two year 'special' rate has also been cut by -20 bps to 4.69% (the same as its 18 month rate).
Their two year standard rate has been cut by -10 bps to 5.15%.
Their three year 'special' rate has been cut by -20 bps to 4.79% while their standard rate falls to 5.25% 4.79%.
Their four year rates (not available at BankDirect) fall by -30 bps to 4.99% and 5.25% respectively.
Their five year rates have also fallen by -30 bps to 5.09% and 5.35% 'special'/standard.
These changes mean ASB now has only one 'special' rate above 5%.
It also means they now have the lowest five year rate in the market at 5.09%.
And it means ASB has joined the group of New Zealand banks that are offering a one year rate lower than their Australian parent. (CBA's one year rate is 4.49% - although CBA's two year fixed rate is 4.29%.)
BankDirect and Sovereign have made identical changes.
Now that ASB has moved we are likely to get sharp rate reductions from both Westpac and ANZ. Kiwibank will also be forced to move lower.
Challenger banks will also need to readjust their pricing. The prospect of a mortgage rate that starts with a '3' no longer seems unreasonable.
Wholesale rates have stopped falling but they are low enough to support these new low rate offers, and still 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 and while we thought they might disappear altogether, they haven't and they are still worth keeping an eye on. ASB however has removed its All Blacks $300 promotion. You can see see the current non-rate home loan incentives here.
The new floating and fixed mortgage rates compare at 6:00 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 |
 |
6.25 | 4.35 | 4.69 | 4.69 | 4.79 | 5.09 |
 |
5.99 | 4.35 | 4.69 | 5.19 | 5.65 | |
 |
6.15 | 4.79 | 4.65 | 4.99 | 5.50 | |
 |
6.15 | 4.99 | 5.19 | 4.69 | 5.19 | 5.65 |
 |
6.20 | 4.69 | 4.79 | 4.79 | 4.99 | 5.59 |
 |
6.35 | 4.49 | 4.49 | 4.49 | 5.29 | |
|
6.14 | 4.69 | 4.69 | 4.69 | 4.99 | 5.59 |
 |
6.24 | 4.69 | 4.69 | 4.69 | 4.99 | 5.75 |
Mortgage rates
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47 Comments
That's a bold call. What makes you so sure next week will see lower fixed term rates? I'm making the opposite call - i.e. Thursdays 25 bps OCR cut (and to some extent, the following one) is well and truly priced in, so a less dovish than expected RBNZ will likely lead rates to stabilise or turn higher. There is a very real danger that further depreciation in the Kiwi will manifest as inflationary pressure - I'd expect the governor's rhetoric to touch on this. They will almost certainly caution the market that a further cut is by no means a done deal.
the inflationary "pressure" so ppl would like to put up prices but cannot because too many cannot pay.
ergo, no effect and that's the best outcome. teh worst outcome is those with monopoly power do put up prices forcing those that cannot to drop prices and maybe even quit, costing jobs.
great outcome, not.
We personally fixed few our mortgages for 6 months in June and July at 4.95 and 4.85 respectively. Thinking of fixing for longer term in Dec 15 and Jan 2016 based on the assumption that interest rate would have bottomed out by then. Any guidance or thoughts will be highly appreciated.
6 months is sensible as you get certainty but can still move fairly quickly. Without a crystal ball I think its hard to know what the future holds. Personally I think average inflation will remain low for decades ie where it is now more or less. In fact we'll probably get deflation as so many ppl are hell bent on trying to raise the OCR. The Q will be with an OCR near zero will that matter if like Greece overseas investors wont lend to us at 2% but demand 30%, then your debt will be ugly to say the least. of course this may never happen.
We fixed in April/May for 2 years at 5% with a cash incentive that brought the effective interest rate down to 4.7% or so.
I emailed my account manager he other day about something mentioning the interest rates keep coming down and it was making me upset (not really as an effective rate of 4.7% still isn't bad), and they checked our account and said we had no contract break fees on it so could change the rate at any time. The cash incentive they gave us is only repayable if we change institutions...
So lowered the rate to 4.35%... fixed that for 12 months. can't see interest rates going up in the next 12 months so think it's a decent move long term.
ASB changed their ERA formula for loans starting after 1-April they compare current swap rates to swap rates when you fixed. For loans approved before then they use the difference between their current retail rate and the negotiated rate that you've currently got.
This meant that with ASB in a falling interest rate environment, provided that you got a negotiated rate below the going special rate you could up until April this year keep re fixing as the rates dropped for no break fee as long as the rate you are going from was below the current special for that term.
Since April ASB has gotten a lot harder to negotiate with.
thanks all -- thought I would just check- as had several loans on unhealthy fixes! managed to break a 5 year loan at 5.4 - for $1000 - refix on the one year rate at over $400 a month better - yes I know the term is different - but be better off in ten weeks and cant see the rate being worse than 5.4 in 12 months time! changed a couple of other 2 year rates - again better off within 8 months - so well worth looking into!
i agree, low rates are very destructive here's what Alan Greenspan has to say
https://www.youtube.com/watch?v=QgkW7UiwO3k
yet Alan Greenspan is primarily responsible for cutting the Fed rate time after time, a libertarian.
If you think low rates are destructive I suggest you consider the alternative, a Great[er] Depression,
You are once again out of your depth and confusing different money reserve systems. Gold convertibility ended in 1971.
I think the biggest intellectual hurdle to overcome is that convention continues to demand these ideas about “reserves” as still physical piles of currencies where the central bank offers the only base supply. This is still the mistaken inference about the “dollar” as what replaced Bretton Woods’ destabilized (by the early mechanisms of wholesale eurodollars already working in the 1960’s) gold mechanics. When the US ended its final link to convertibility, Nixon “closing the gold window”, the replacement was a credit-based reserve currency – the eurodollar not the dollar or even petrodollar as the emphasis is on credit. The distinction is not trivial; it is everything. Read more
LOL yet more attempts to shoot the messenger of a message you do not like. I think you talk utter rubbish, your reply has little or nothing to do with the discussion about Greenspan but just an attack. I didnt mention different money systems but Alan Greenspan and his "puts" whereby he dropped the "OCR" to stop recessions and kept doing it to effectively, now he whines about it.
http://krugman.blogs.nytimes.com/2010/04/04/alan-greenspan-still-not-a-…
"Alan Greenspan continues his efforts to cement his reputation as the worst ex-Fed chairman in history; in today’s FT, he comes out for a repeal of financial regulations designed to prevent a repeat of the crisis for which he, more than any other individual, bears personal responsibility."
http://krugman.blogs.nytimes.com/2011/03/30/the-exceptional-mr-greenspa…
So rather than play the man play the message by since you are a "master of finance" by answering simply so we can all understand it.
PS His political leaning as Ayn Rand acolyte and are not exactly unknown.
http://krugman.blogs.nytimes.com/?s=alan+greenspan
"Oh, and the man who failed to see the housing bubble and refused to do anything about subprime — and has yet to admit to making any mistakes — ends by reaffirming his laissez-faire faith:
It is important, indeed crucial, that any reforms in, and adjustments to, the structure of markets and regulation not inhibit our most reliable and effective safeguards against cumulative economic failure: market flexibility and open competition. "
far more relevant, unlike your past 2 or 3 answers which look like mis-direction.
So when do we get an honest discussion from a 'master of the financial universe" such as your great self?
Again not terribly relevant to the original thread. I certainly have a concern that voodoo economics being put forth by some self proclaimed "masters of the financial universe" ie opposition to lowering and even raising interest rates can send us into deflation. If that then accelerates and the present x2 or even x3 housing bubble collapses in NZ it will have a major impact on NZ and the only comparison I can see is 1987 like or indeed something like the Great Depression.
Isn't the issue more one of mission creep, as the yanks say? It seems useful that central banks are set up so they can act rapidly in crisis situations. The problem is they are then unable to get out, and because they have taken the pressure off the other actors (individuals, banks, businesses, politicians and civil "servants") they are forced to continue their crisis actions as ongoing policy.
They thus enable stupidity which, unsurprisingly, sets up the next crisis a few years down the track.
Yes I tend to agree. The thing is the Govn of the day should once the RB has stabilized the immediate situation fix the problem, but they have not this leaving the RB with no other course but to continue with emergency measures. We of course as voters dont want it fixed as we think we are making lots of money.
PS Helen Clark should as per the last RB's warnings delt with the rising problem of the housing bubble, a major failure she deserves no quarter on IMHO.
So, if I understand this correctly, the Eurodollar loans in existence are the driving force in world money. When they are expanding we have a boom, when they contract they force central banks to invent new ways to save the banking system.
This is the case in NZ as far as I can see, the $200,000,000,000 of household debt forces the RBNZ to be the tool of the banking system, forced to modulate interest rates at a level that kiwis can (just) afford. They thus maximise banking sector revenue.
yes and interesting point and helps show how ludicrous the claim is for a bit of a rise in the OCR to slow this madness only in Auckland housing. Just how the rest of the economy could survive an OCR for 17~18% (to give 20% retail) is not in question in my mind, it could not, not even 5% IMHO without collapsing.
Example of an actual property investment from a 2 minute search on internet: 8 Sinclair ave palmerston north. Consistent population growth and rental growth and student influx. Price 190k could own. Rent 300 per/week = $15,600. At 20% deposit = 38k invested, 152k mortgage. Interest on 152 (Half at 1 year at 4.35, half locked for 5 years for certainty) = $7171 + rates and insurance of 3k = $10,174. . Profit (before maintainance and tax) = $5,426 ($104 per week in the back pocket). ROE = 5426/38000 = 14.3%
Add a (extemely conservative resulting from $ losing purchasing power in general only) 2% capital appreciation to give $3800 p.a to cancel out any maintainance costs. Using last years 3.6% gives $6840 extra TAX FREE equity. Longer term average cap growth in PN closer to 5% (although I would never speculate and use such a non-conservative figure in my budgeting) would see an extra $9500 tax free in the pocket per year, or 39.2% return on equity from a mere 5% capital gain situation.
Imagine the numbers if the ripple effect as seen from 2004-2007 takes hold and capital gains of 20% p.n are seen.
Risk free exposure to NZ property..
Have you been there lately. I have. It is a windy hole only second to Hamilton. Very little happening because of the farming economy. I know people who are holding empty commercial property there and who obviously wish they had never bought there. Cheap is not always best. Best to leverage more and buy in Auckland. Guaranteed capital gain and people want to live and work there.
Oh so you know Jonathan Wallace? Worth 100mill on recent rich list who started and is still investing heavily in commercial real estate in P.N?
Value is relative. I'd rather buy a cheap, but robust toyota corolla than a flashy bells and whistles bmw dispite the later being 'more appealing' on the surface.
And dairy is taranaki and waikato, PN has more beef and sheep/lamb (and is NZ's second biggest tertiary education city on a student population per capita basis, behind Dunedin) so the lower $ has a lot more of a postive effect (+ international students) than any negative effect from lower dairy payout.
Ps. Look forward to watching how your 'gauranteed capital gains' in auckland works out for you post Oct this year.
Yes. $125k as at 2003. Current GV 235k. = 5.4% compounding average p.a capital growth. Above any of the 3 figures I used in my conservative workings above.
That period includes a single 'boom' cycle, and also includes the past 9 years of 'bust' where prices have remained flat. (not unlike the period 1997-2004 that preceding the 2004-2008 boom).
Yes I do know Jonathan and his CEO Paul Broadlaw. They are not only in PN and that was a good decision. PN has to be one of the windiest and most boring places in NZ with virtually no major companies operating from there anymore. I generally only visit for one night and are very pleased to get out of it just like Hamilton. Absolutely no redeeming features at all. A nephew just bought a house in PN and I have to say it was pretty run down. Of course I did not say anything as he will find out in due course when he starts shelling money on it to bring it up to a reasonable standard.
So you're saying its not an attractive tourist destination? Buy in Rotorua if 'tourist destination' is your key criteria, Rotorua gets the most in NZ. Mind due census results indicate Rotoruas already small population declined further since 2006. Unless they're demo'ing housing stock then there's going to be empty places their.
and will the jobs be there when they arrive, there are already lay offs happening wont be long before they start getting reported in MSM
Employers hold off hiring, survey finds
http://www.stuff.co.nz/business/industries/71825143/employers-hold-off-…
I live in Rotorua and have been informed that in the last year the previous 10 years decline in population has been reversed. The property market is currently heating up with few properties up for sale. Lots of multiple bids happening. Also evidence of increasing rents.
Rotorua city growth 'booming' on back of tourism.
http://www.nzherald.co.nz/rotorua-daily-post/news/article.cfm?c_id=1503…
This is a hollowing out of the centre due to creation of suburban shopping centres. Hopefully rentals will reduce to entice new businesses back in. There is quite a bit of unnoticed business investment going on which is probably what has driven the GDP up. There is also a small but skilled young workforce who are attracted to the area because of the lifestyle opportunities.
7 point what unemployment? 'growth' of 4% GDP highest in NZ for quarter, just means starting from a very low base, and highly variable data. Reversing a decline of 600 people in a year is not hard, immigration has been running at around 1% of population of secondary cities for past couple of years, closer to 2% in auckland though. Still, cant see any developers lining up to build in places like rotorua or plamy when theres 10x the $ to be made by building up in auckland. And no apartments ever going to go up to absorb population growth in rotorua or palmy, whereas literally thousands are currently under way in auckland. While not my top pick, I'd still back rotorua over auckland at this point of the cycle.
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