Kiwibank cuts fixed-term mortgage rates

Kiwibank follows floating rate cuts with reductions in its fixed-term mortgage rates

11th Sep 15, 10:54am by Gareth Vaughan

Kiwibank has announced a range of cuts to its fixed-term mortgage rates on the heels of cutting floating rates on Thursday after the Reserve Bank cut the Official Cash Rate by 25 basis points to 2.75%.

The fixed-term cuts range from six basis points to 30 basis points. Kiwibank says it will honour these new carded, or advertised, interest rates from Monday.

Here are the cuts announced by Kiwibank;

Six month fixed: 5.19%, down 10 basis points;

One year fixed: 4.49%*, down 30 basis points;

Two year fixed: 4.59%*, down six basis points;

Three year fixed: 4.85%*, down 14 basis points;

Four year fixed 5.25%, down 14 basis points. And;

Five year fixed: 5.35%, down 15 basis points.

Those with an asterisk beside them require a minimum of 20% equity in the property or a minimum deposit of 20%. Otherwise Kiwibank's standard rates apply which are 4.85% for one year, 5.10% for two years, and 5.25% for three years.

Following the OCR cut Kiwibank has also announced 25 basis points reductions to its variable, or floating, rate, offset mortgage rate, and revolving rate. They are now all 5.90%. Those cuts were effective immediately for new customers, and in two weeks time for existing customers.

See all banks advertised, or carded, residential mortgage rates here.

The new floating and fixed mortgage rates compare as follows: (today's changes are marked *)

below 80% LVR	Floating	1 yr	18mth	2 yrs	3 yrs	5 yrs
		%	%	%	%	%
	5.99	4.69	5.15	4.89	5.59	5.79
	6.00	4.35	4.69	4.69	4.79	5.09
	5.89*	4.35		4.69	5.19	5.65
	5.90	4.49*		4.59*	4.85*	5.35*
	6.00	4.99	5.19	4.69	5.19	5.65

	5.95	4.69	4.79	4.59*	4.99	5.59
	6.35	4.49		4.49	4.49	5.29
	5.89	4.69	4.69	4.69	4.99	5.59
	5.99*	4.69	4.69	4.69	4.99	5.75

Mortgage rates

Select chart tabs

Source: interest.co.nz

Source:

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25 Comments

by MortgageBelt | 11th Sep 15, 11:57am 1441929432

Will provincial city housing start to recover now?

by Simon | 11th Sep 15, 12:46pm 1441932387

Yes. Animal spirits. Throw some bread down for some birds in the park and watch how they act. First one bird will slowly and sneakily grab a small piece and quickly scamper away. Then, after seeing that, a second and third will join the party. Then, after seeing its safe, and losing the fear of being a loner whos going to look stupid infront of everyone, the rest pile in until you get a bunch all fighting over the scaps.

At the moment everyones sitting watching waiting for someone else to test the water. Once a few aucklanders snap up properties in front of timid first home buyers who have no confidence in their small city, the large pool of potential buyers who have been sitting on the sidelines will pile in at once. Result, 20% p.a appreciation as seen in auckland past few years. Human nature isnt region specific.

by Halfway To Paradise | 11th Sep 15, 12:59pm 1441933145

We are starting to see this in Rotorua now. Multiple bids, properties quickly coming off the market. This is evidenced by record low of properties for sale (and rent) on TradeMe. Rental prices also starting to creep up.

by Simon | 11th Sep 15, 5:39pm 1441949970

According to TM Rotorua has 480 listings (for population of 65k).

PN has 167 listings (for population of 82k).

Not that its a competition! Just saying that if it was, then PN would have the tighter, more supply restricted market (up there with Auckland as far as limited listings per capita go).

Just means less volume to absorb any demand shock that might arise when sleepy FHB's suddenly wake up at once to the sound of aucklanders rattling local espresso machines into action

by rastus1 | 11th Sep 15, 2:07pm 1441937276

...and then the cat pounced.

by iconoclast | 11th Sep 15, 3:17pm 1441941447

Behavioural Economics and Probability Theory

Having spent many years studying and researching probability and behavioural probabilities

There is a great deal of material available on this subject. Problem is most of it relates to mathematical statistical theory. In one of Michael Crichton books, one of the main characters is a university professor whos expertise is probability of human behaviour, who is able to analise shifts in social conditions and extrapolate from that the expected effects in the behaviour of either a group or an individual. The concept of the ability to predict human behaviour (non-statistically) in response to given events is well articulated by Crichton. You wont find much published research on the subject anywhere. The only reference found was a single chapter in one of Carl Jung's 20-odd books on psychology. John Maynard Keynes, 1883-1946, father of modern economics, wrote "Treatise on Probability" 1921

Early in my journey, while haunting the mathematics departments of Monash and Melbourne Universities, met a professional blackjack player who described blackjack as probably one of the best fields of probability, both statistically (the cards) and behavioural (the players), plus it was real-time. Being interested, he took me under his wing and trained me for a year in the art of blackjack.

While there are seven player positions on a table, the most favourable conditions for the player are when you are the only player, playing head-on against the dealer. I played the game regularly for two years, going to the casino, looking for an empty table, prowling around. Usually they only became available when the table has wiped every player out. I would sit down and commence play. I would be lucky if I got 10 minutes of head-on play. Before long a chinese player would sit down and join in. As soon as the conditions became unfavourable I would leave the table. The chinese player would leave also. He would not play on his own. I would wait for 5 minutes and sit down at the table again. Immediately the chinese would join in again. I would leave again and go look for another table. They are herd animals, not individuals. Sometimes 3 or 4 of them would join in and I would stop playing and observe. As soon as I stopped they would leave. I did this for 2 years then gave up. Have played every casino in Australia and most of the NZ Casinos. Auckland and Hamilton have paid for my trips. It became impossible to find an empty table to play on your own

by Kate | 11th Sep 15, 6:33pm 1441953238

Fascinating :-) what's the title of the M Crichton book?

by iconoclast | 11th Sep 15, 7:43pm 1441957425

The Book? - The Sphere

Behavioural Economics

Why the probability of Auckland house prices falling is low

The Blackjack analogy and probability

High value cards (8 and higher) are favourable to the player.
Low value cards (6 and below) are unfavourable to the player.

There are 12 picture cards and 4 ten cards in a deck of 52. That's 16 cards that have a face value of 10 in blackjack. So 1 in every 3.25 cards is a ten. In a perfectly distributed deck, every 4th card out should be a ten card.

If the first two cards out are low cards, then the unplayed remainder of the deck is rich in ten cards and the probability of the next card out being a ten increases. If the first two cards out are ten cards, then the unplayed remainder of the deck is deficient in ten cards and the probability of the next card out being a ten decreases. So you would only play when the deck is rich in ten cards. Stay out when it's deficient.

Consider Auckland housing as a game of cards where there are low value cards and there are high value cards, except when the deck is played out there will be every possibility they won't shuffle the deck and start another game. The high cards are clustered in certain suburbs. Called clumping. Most of the high cards have come out. There is only low value cards left in the deck. But, new players (new migrants) are still arriving and sitting down at the table, playing for high stakes. Do they realise all the 10 cards have gone?

What will happen? What would you do?

Zena, my eco-warrior princess, is a Jungian Analyst behavioural head-doctor

by Stephen Hulme | 11th Sep 15, 7:40pm 1441957202

Bayes' theorem?

by steven | 12th Sep 15, 7:52am 1442001148

Except to my mind it is not one card game, or much like several card games. ie the players are buying and selling cards amongst themselves and the migrants are not even at this table as the buy in to it is too high. So at best we have several card games and I suspect migrants as opposed to speculators are not even in the casino.

Why do I say this? Do we have a statistic of what % of migrants land with a "suitcase of money" as a deposit? I work with quite a lot of migrants and I only know one who has bought, a senior manager from the USA with a PhD as a wife has a lifestyle block all the rest rent. Most South Africans land with "nothing". They have left with their lives and their skills something the SA Government has not taken off them. Anyone landing from a developing nation I cant see having a substantial deposit to join the game. Indeed if they are non-white its hard to get a job let alone one paying as well as a NZ whitey so they are at a double dis-advantage.

I am not so sure Auckland's prices will not fall, we have a x3 bubble from the normal 3 to1 PE ratio. I am very sure however with a 9 to 1 ratio that going much higher ie a doubling to 18 to 1 some "predict" is impossible, no where in the world has that happened. The only Q is can foreign speculation drive it a lot higher as that seems to be a huge unknown, rents certianly dont seem to be keeping step. When a Labour Govn brings in a CGT and/or stops foreign ownership that will be the end.

by Simon | 14th Sep 15, 9:53am 1442181204

Yeah animal spirits is def a John Maynard Keynes phrase I stole..

I think some of the best 'naturals' at seeing through all the BS of humans and seeing whats really going on from a behavioural point of view are Buffet and his mentor Ben Graham. And for mine, if you got this stuff down pat, you'll make more $ in stocks than you will in card games

by IK | 11th Sep 15, 8:42pm 1441960953

Rotorua house sales. "According to REINZ data there were 155 sales in August, compared with 71 for August last year, with Rotorua outranking other similarly size cities. Tauranga City, which does not include Mount Maunganui and Papamoa, recorded 153 sales, Napier had 128 sales. There were 83 sales in Nelson and 75 in New Plymouth

http://www.nzherald.co.nz/rotorua-daily-post/news/article.cfm?c_id=1503…

by Simon | 12th Sep 15, 10:25am 1442010307

That's certainty a lot of sales for a city of only 65k people, if it's enough to wake up the fhbs then id imagine some large price moves will follow. Volume always leads price. Number of listings need to be considered too though. P.n has so few listings it would be impossible to match those sale numbers as there simply are not enough people wanting to sell. Low 100s p.n sold in august i believe which is still up a lot on last year and trending higher.

by don'tgetmegoing | 12th Sep 15, 11:22am 1442013774

It will not be first home buyers, it will be investors, nothing has happened to make people who live in Rotorua or anywhere else, any more able to purchase their first home than they could a few months back. It will be investors looking to escape restrictions in Auckland, that should have been applied to investors all around the country as all they are going to do is export Auckland's problems to the regions.
Something positive MUST be for NZ fhbs everywhere, none of what has happened has done a single thing for them, anywhere

by Simon | 12th Sep 15, 12:17pm 1442017065

I disagree.

Fhbs are emotionally driven.

First by fear. They consider buying their first home for YEARS before actually pulling the trigger as for them it's a big deal. And every house they look at is not perfect enough so it's path of least resistance to simply not buy.

They are CHOOSING not to buy in the very cheap regions. Any couple who's been in kiwisaver for 3 years plus can most likely buy up to 350k without having saved a cent themselves.

In auck at prices of 700k up it is a capability problem.

In the regions it is fear and timidity.

Investors will certainty play a part in the initial sales we are already seeing but they tend to b rational and not over pay.

When fhbs see prices moving and houses sold infront of them their fear of buying will turn to fear of missing out. This fomo is what has really been driving auck prices well beyond levels rational investors would pay.

And i believe this fomo will eventually be what drives prices in the regions much much higher

by don'tgetmegoing | 12th Sep 15, 1:19pm 1442020754

Yet another reason that this business of investing in residential housing, other than building new for sale, not renting, MUST be knocked on the head
BTW buying a HOME is an emotional thing, it is to be your HOME. What house buying has become in this country is gross

by cmat | 14th Sep 15, 7:43am 1442173406

I totally agree with the crux of what you're saying but I had to check one claim you made...

"Any couple who's been in kiwisaver for 3 years plus can most likely buy up to 350k without having saved a cent themselves."

I don't know how your maths works here.
Let's test if "Any couple" could do that without having saved a cent themselves....

For a 20% deposit the couple requires $70k to purchase a $350k property.
That's $35k of KiwiSaver funds each.

Assuming that the couple do well in KiwiSaver and get above average returns of 15% they will need to EACH save $10,079 p.a. to have $35,000 after 3 years (using a PV calc).

If they contribute 3%, their employer is matching and they receive the $521 tax credit then they need to personally contribute $4,779 p.a.
Now here is the kicker. Employee contributions of $4,779 p.a. imply a salary of $159k. $159k!

So for a couple to afford the deposit for a $350k home after 3 years, using only KiwiSaver they EACH would need to earn at least $159k, or $318k p.a. between them.
"Any couple"... yeah I don't think so.

by jamesy | 14th Sep 15, 8:30am 1442176259

Yes, that "without having saved a cent themselves" is bollocks.

However, I was earning substantially less than 159k p.a. and still managed to save 100k for a deposit in 3 years without needing to dip into KS, and partner saved around the same ballpark.

Helped not having kids though.

by Simon | 14th Sep 15, 8:58am 1442177937

Your major error in calcs is the 20% dep required. The reason I used 350k is that is the cut off for the first home buyer grants and welcome home loans which mean ONLY 10% REQUIRED and 5k EACH (or 3K each if only 3 years which I said without actually running the numbers.. so I think 3 years might be pushing it but 5 years def.. let see...):

A) They need only 35k combined deposit to buy this first home using welcome home.

B) They get given 6k each (if both been in kiwisaver for 3 years each), so target is now 29k

C) ALL kiwisaver is now able to be used for deposit (bar the 1k grant), so they only need $14.5K saved up in kiwi saver to buy this $350k first home in the provinces (which is a mansion in most towns outside of auck,welly,chch, ham and tauranga).

At 50k each income and 2 years at 4% (+4% employer + $521 per year govt.) ( i think this was min employers had to match until recently reduced to 3%?), and 1 year at 3% + 3% + $521 gives:

$18,084 for the first two years

$4042 for the year just gone.

= $22,126 + $6k grant = $28,126

So they can buy a $280k house without saving a cent themselves outside kiwisaver contributions.

At 60k each salary they'd have 33k dep and buy a $330k house, close to the $350k cap.

PS: Did noy bother to include the 15% p.a gains on kiwisaver $$ due to fund returns (very hard calculation to get right considering its applied on a dollar cost average basis over time the 3 years, need spreadsheet). BUT considering they only need a 25% gain to get from 28k to 35k it's very possible this could get them there or very close.

by Simon | 14th Sep 15, 9:06am 1442178413

5 year example just quickly... 50k each couple, use 3% + 3% for simplicity (even though most ppl in for 5 years would be at 4%, or even 6% for most of that 5 years:

6k x 5 years = 30k + (+ govt contribution of 521 each per year for 5 years =5210) = $35,210

At 5 years, they get 5k GRANT EACH = 10k

= 45,210k deposit without having to save a cent beyound kiwisaver!

***********************At 5 years on 35k each:**********************

= $21k (own + employer contribtion over 5 years at 3%)

+ 5,210 (govt)

+$10k GRANT

= $36,210 after 5 years

= $362k house without saving a cent earning only 35k each!

by Halfway To Paradise | 12th Sep 15, 12:19pm 1442017193

I expect to see new property in esters start to come into the market in the regions, they are always behind the game and buy as prices are rising.

by sharetrader | 12th Sep 15, 12:28pm 1442017723

and they will be kiwi investors as overseas money will mostly stick to the main centers

by don'tgetmegoing | 12th Sep 15, 1:20pm 1442020818

Yes they will and I hope the regions will make them as unwelcome as foreigners are in the city markets

by Simon | 12th Sep 15, 4:15pm 1442031313

A lot of things in life aren't fair. Human nature is gross in a lot of ways investing in property is well down the list and is an inevitable consequence of govt and local council decisions. Don't be a victim and complain, understand how things work and your efforts will be rewarded... expect everything on a plate and you'll always miss out on the ample opportunities life has to offer

by don'tgetmegoing | 12th Sep 15, 5:35pm 1442036144

Houses are for people to live in and make their home in NOT for what is going on today. I am well past this rubbish that is going on with houses. I was there in the real estate game when it first kicked off in the late 80s I thought it was rubbish then and I got out. At least I have principles.
I live to see the day that investing in houses is seen for what it truly is, and dealt to. You can go and be unfair somewhere else, leave the houses alone!!!!!