BNZ raises some key 'special' mortgage rates, cuts many 'standard' rates, as wholesale money costs head down to record lows

BNZ raises some key 'special' mortgage rates, cuts many 'standard' rates, as wholesale money costs head down to record lows

Despite falling swap rates, BNZ has today raised two of its three 'special' fixed mortgage rates.

It has raised its two year 'special' by +10 bps to 4.49%.

It has raised its three year 'special by +15 bps to 4.64%. (yes, 4.64%.)

Its one year 'special' is unchanged at 4.39%.

But it has cut a range of standard fixed rates at the same time.

Its 18 month rate has been reduced from 5.09% to 4.99%, a -10 bps drop.

Its four year rate has also been reduced, down -15 bps to 5.25% from 5.40%.

Its five year standard rate is down -15 bps as well to 5.35% from 5.50%.

And its unique seven year fixed rate has benefited from a similar -15 bps reduction to 5.75%.

The result of these changes leaves BNZ with an unremarkable carded rate offering, except for their three year 'special'.

Despite today's +15 bps rise, its 4.64% rate is still the lowest carded three year rate among the main banks.

These changes come despite wholesale swap rates falling to record lows for terms 3 years and longer, and close to record lows for one and two years.

Risk spreads, which add to bank costs, are at high levels. Australasian corporate CDS spreads for investment grade debt, which is a proxy for these premiums, have risen lately, although in the US and Europe these spreads have been falling fast in the past few days. The other thing to remember about the Australasian index is that the corporates covered in that index include the Australian miners who will be distorting the index higher. Banks won't be suffering the full weight of the spread rise.

Today, mortgage rates now compare across all banks as follows:

below 80% LVR  1 yr  18mth  2 yrs   3 yrs  4 yrs  5 yrs 
  % % % % % %
4.39 4.95 4.49 5.10 5.25 5.35
ASB 4.39 4.49 4.49 4.75 5.15 5.25
4.39 4.99 4.49 4.64 5.25 5.35
Kiwibank 4.35   4.39 4.85 5.25 5.35
Westpac 4.39 4.95 4.49 4.80 5.25 5.35
             
4.39 4.39 4.49 4.75 4.99 5.15
HSBC 4.25 3.95 4.39 4.59 4.79 4.99
HSBC 4.35 4.35 4.35 4.65   5.29
4.35 4.69 4.29 4.79 5.35 5.35

In addition, BNZ has a fixed seven year rate of 5.75%, while TSB Bank offers a fixed ten year rate at 5.75%.

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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Looks like a con job to trick people into locking in for 1 year. These banks should be slashing fixed mortgage rates across the 1 to 5 year timeframe not increasing them.

Of course , the banks will do there best to not signal a significant rate drop, until after the drop.I would view insignificant rate changes such as this as an attempt to make people fix now, by trying to signal rates will rise shortly. Do they really expect us to believe they "had " to make a 0.1% increase ?

You know , its ridiculous that money is so cheap , especially when I don't need to borrow anything . I have no debt whatsoever , and have no desire to incur any debt .

Something happened to us way back that ensured we became very careful with every cent we earned

About 20 years ago our mortgage rate went over 20%....... yes 20% per annum , we were paying double for the house every 60 months , or double about every 3 and a half years when you compound it .

It was an absolute crisis , we nearly lost our home .

Wages were a joke

There was no money for anything , no Movies , no dinners out , no new ( or used) cars, no new clothes , and I even considered disconnecting the expensive home landline phone to save money .

The youth of today have it so easy , its unbelievable , high wages for skilled work , inexpensive food, flash new cars , Fiji or Gold Coast holidays , constant shopping for stuff they don't need , massive TV's , laptop computers , multiple cell phones (even for the grandchildren) , e-mail , internet , cheap clothes from China, its never been so good .

And massive mortgages .............. for their sakes , I hope history does not repeat itself .

The wheels could really come off the "good life" bus if history repeats

For the record, I think history will eventually repeat, but it will take massive sovereign bond defaults or huge derivative defaults before interest rates rocket up.

I don't think printing money to buy already broke sovereign debt that they can't sell elsewhere is a bright long term strategy and just snowballs the problem. Unfortunately for Europe sovereign debt forms the bank reserves so writing down this ever growing mountain wipes out their bank capital, which then in turn freezes credit markets, and so on and so on.... I don't know where it will all end up and as long as they can kick it forward it will be someone else's problem.

The numbers are clear that house affordability has decreased over the last 20 years.

In 1998 avg Auckland house was 4 x avg income, by 2012 it was 6-7 x (see http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1088...).

Now it is estimated to 10x although I think it is more likely 12x (see http://www.scoop.co.nz/stories/PA1507/S00124/auckland-house-prices-now-1...).

Anecdotal stories don't really give an accurate picture of the situation. Show me a house in Auckland I can buy in Auckland for 4x the average household income...

"The youth of today have it so easy"

No they don't Boatman. They are quite frankly screwed and don't know it yet. They will, we all will know in a not too distant future just how ridiculous this whole BS monetary system has become. Credit even cheap sounds great but it's essentially just easy debt, and DEBT is killing our global economies one by one. Breakpoint will come and so quite possibly will WW3 the way things are heading. The "youth" are facing some dire decisions I believe. There may never be 20% per annum again, but what difference will it make if you can't even afford 1% per annum? I feel for the youth these days. Little do they know what they face. Their deluded parents & teachers are hardly going to tell them the truth about our our monetary system and many still don't know , same as we were never told. But we know now don't we? We know something has to give. The trigger? who knows.

You missed out the part where wage inflation took care of the principal of the loan very quickly.

These days it is a very different kettle of fish and in the long term, much worse.

Relatively small rate rises would also topple the entire house of cards and somebody gets left holding a giant bag of unrepayable debt.