A big-four bank raises longer fixed rate mortgage rates by up to +30 bps as wholesale rates settle in with compounding higher levels

A big-four bank raises longer fixed rate mortgage rates by up to +30 bps as wholesale rates settle in with compounding higher levels

ASB has raised all its fixed mortgage rates for terms of three years and longer.

This comes as wholesale swap rates have moved sharply higher in the past four weeks.

It also comes a month after ASB raised all its 'special' rates for terms to three years.

Today's (Friday) changes add +20 to +30 bps to all their longer rates.

The same changes apply at BankDirect and Sovereign.

ASB's fixed three year 'special' has been raised by +20 bps to 4.59%. Their standard rate is up a similar amount to 5.09%.

Their four year 'special' rate has been raised by +30 bps to 4.89%. Their four year standard rate is up +20 bps to 5.29%.

And their five year 'special' is up +30 bps as well, to 5.09% which their five year standard rate is up +20 bps to 5.49%.

Over the past month, 3, 4 and 5 year swap rates have risen between +27 and +35 bps.

Retail term deposit rates are staying relatively elevated as well, although these will have been less influential in today's rate hike decision because they all come at the long end.

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

A snapshot from the key retail banks is:

below 80% LVR 6 mths  1 yr  18 mth  2 yrs   3 yrs   5 yrs 
  % % % % % %
4.99 4.25 4.89 4.29 4.99 5.30
ASB 4.75 4.29 4.29 4.34 4.59 5.09
4.99 4.29 4.99 4.39 4.49 5.15
Kiwibank 4.75 4.29   4.29 4.39 4.99
Westpac 5.15 4.25 4.95 4.29 4.49 4.89
             
4.65 4.39 4.45 4.45 4.59 4.99
HSBC 4.85 4.19 4.19 4.19 4.49 4.99
HSBC 4.50 4.25 4.25 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%.

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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What will be the point of cutting OCR if banks are not passing the cuts to clients? Just to help banks increase their margins?

I think you just answered your own question...

The OCR is largely irrelevant to banks. They cannot borrow short-term money from the Reserve Bank at the OCR to make loans. Regulations require they only fund loans using long-term bonds or sticky retail deposits. Banks would not be paying 3.6% on a 6-month term deposit or 3% on bonus saver accounts if they could fund loans at the OCR of 2%! Hope this is helpful.

serious question: so why is the RBNZ dicking aorund with the OCR if it os largely irrelevant?

I think they think this is the only way they can lean against the NZD which they view as too high.

That strategy clearly isn't working!

Well put kermit42.

A tax cut should compensate for those increased rates now that the govt is looking so flush with surplus.
When Trumpy gets in will that send swap rates lower?

Yes tax cuts, less money collected by the government to repay existing government debt and invest in New Zealand and more money to be spent on interest from home mortgages owned by banks operating out of Australia. What a smart idea.....