ANZ lowers one of its two home loan 'specials' to the same rate offered by most of its main rivals, but doesn't match the recent reduction by Kiwibank

ANZ lowers one of its two home loan 'specials' to the same rate offered by most of its main rivals, but doesn't match the recent reduction by Kiwibank

ANZ has joined the pack today by announcing a -6 bps cut to its two year fixed rate mortgage 'special'.

It has set this rate at 4.29%, the same level offered currently by its main rivals ASB, BNZ and Westpac.

Last week, Kiwibank also cut its 2 year fixed rate, but that was by -10 bps and to the lower level of 4.19% which gives this state-owned bank a 10 bps carded advantage over all its larger rivals.

ANZ's change will be effective from Thursday, September 15, 2016.

ANZ's 'specials' are available to customers with at least 20% equity, an ANZ transactional account with salary direct credited, plus either any ANZ Credit Card or Insurance product. 'Specials' are not available with any package discounts.

The last time ANZ changed its 2 year 'special' was in the third week in March 2016 when it was reduced -14 bps from 4.49%. It had been at the 4.35% level for 25 weeks, accentuating ANZ's reluctance to offer lower rates.

Back when it was last changed, the wholesale swap rate was 2.26%. Today it is 2.07%, a fall of -19 bps over that time. And is passing on just -6 bps of that to customers today.

ANZ has form on margin retention. It held on to 20 bps of the -25 bps reduction in the last OCR cut.

Because its shareholders are reluctant to add capital to the bank, it needs to respond to regulator pressure (especially Australian regulator pressure) to build back its capital level by extracting more profitability from its customer base.

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

below 80% LVR 6 mths  1 yr  18mth  2 yrs   3 yrs   5 yrs 
  % % % % % %
4.99 4.25 4.89 4.29 4.99 5.30
ASB 4.75 4.25 4.25 4.29 4.34 4.79
4.99 4.29 4.99 4.29 4.49 5.15
Kiwibank 4.75 4.19   4.19 4.29 4.99
Westpac 5.15 4.25 4.95 4.29 4.49 4.89
             
4.50 4.25 4.29 4.35 4.49 4.99
HSBC 4.85 4.19 4.19 3.79 4.49 4.99
HSBC 4.50 4.25 4.15 4.15 4.55 4.99
4.75 4.25 4.35 4.19 4.59 4.99

In addition, BNZ has a fixed seven year rate of 5.55%, while TSB Bank offers a fixed ten year rate at 5.75%.

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I'm interested in what most people think. Will interest rates drop below 4% over 3 years. I'm thinking about breaking my fixed term of 6% which I have 8 months remaining. Any thoughts, suggestions appreciated.

Just came out of 2 year fixed @ 5.99% myself. The break fee was too high for me to break 6 months ago, so i waited. I fixed for 1 year expecting rates to go lower or remain. You might call your bank and check the break fees as the calculations are not straight forward

With 8 months to go I'd ride it out. Break costs are a nil sum game, unless you know something the markets don't then all you end up doing is pre paying the difference plus a $100 - $200 admin fee for the pleasure.