Two more banks have raised home loan rates

SBS Bank and the Co-operative Bank both raise mortgage rates again. The Co-operative Bank uniquely makes matching term deposit rate increases

24th Jan 17, 8:14pm by David Chaston

Mortgage rate rises are now coming thick and fast.

Two more banks banks have raised fixed home loan rates.

And one of them has raised term deposit rates as well.

Firstly, SBS Bank has raised all fixed rates except their one year 'special' which remains a market leading 4.19%.

That new low rate was changed on January 21, just three days ago. At that time, they raised their two, three and five year 'special' rates. Today's changes raised them even further.

The SBS Bank two year rate has now risen from 4.54% on Friday to 4.75%. That is a +21 bps rise.

Their three year rate has risen +14 bps to 5.09% over the same period.

The Co-operative Bank has also raised most rates to, all them for terms of 1 year and longer.

They last raised rates on Wednesday, January 18, one week ago. Their rises are +10 bps for all rates changed.

However, the Co-operative Bank has also raised term deposit rates for investors, also by +10 bps, and for all terms of 1 year and longer.

Neither SBS Bank or the Co-operative Bank have changed their floating mortgage rates in today's moves.

These changes follow home loan rate rises by both ASB (who did raise floating rates) and Kiwibank (who raised their floating rate slightly earlier).

None of today's changes alter who has the leading carded rates for mortgage borrowers. SBS Bank and HSBC Premier to lead for a one year term, TSB Bank has the market-leading offers for 3 and 5 year terms with HSBC.

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

A snapshot from the key retail banks is:

below 80% LVR	1 yr	18 mth	2 yrs	3 yrs	4 yrs	5 yrs
	%	%	%	%	%	%
	4.45	5.05	4.75	5.49	5.70	5.85
	4.59	4.75	4.79	5.09	5.49	5.69
	4.49	5.05	4.79	5.09	5.69	5.79
	4.35		4.65	5.05	5.55	5.65
	4.49	5.05	4.79	5.09	5.69	5.49

	4.55	4.70	4.85	5.15	5.55	5.65
	4.19	4.29	4.39	4.69	5.09	5.29
	4.19	4.75	475	5.09	5.45	5.69
	4.25	4.45	4.49	4.69	5.10	5.29

In addition to the above table, BNZ has a fixed seven year rate which is 6.15%.

TSB Bank has a ten year fixed rate of 5.75%.

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34 Comments

by CJ099 | 24th Jan 17, 8:29pm 1485242966

Humm... Looks like NZ is in high risk = deep doo doo.

by sharetrader | 24th Jan 17, 8:48pm 1485244125

had someone show me today a 2 year rate offered by SBS I told them to lock it in quick smart, they have a 2 year due in july at 5.1% and struggling with paying.
looks like if they can not lock it in shortly they may have a problem on their hands

by THE MAN 2 | 24th Jan 17, 8:55pm 1485244547

Yawn!
Cooperative Bank?
How much lending on mortgages would they do?
The rate rises are Insignificant at the moment and won't be hurting anyone except,the people who maybe are looking to buy, for serviceability.
Most people will still be fixed at higher than the current rates.

by Sleepydog | 24th Jan 17, 9:29pm 1485246579

How much were the fixed rates before?
Can you please be more exact, like what where the rates, and when were they?~

by THE MAN 2 | 24th Jan 17, 10:19pm 1485249552

22 months ago i.e. March 2015 fixed rate for 3 years 5.15 %, rates are currently still well under this.
Yes they may continue to rise for a wee while but not dramatically.
United States with Trump at the helm is certainly not going to blossom and the threats of these HIKES is based on not a lot.

by nymad | 25th Jan 17, 8:31am 1485286262

Can you read the table?
Fixed for 3 years is not well under 5.15% for the majority of lenders. Compare apples with apples, mate.

by THE MAN 2 | 25th Jan 17, 11:18am 1485296311

Nymad, didn't realise that people,had to continue to fix their loans for the same length when the rollover.
You must know differently to me then.

by mfd | 25th Jan 17, 12:53pm 1485302038

You must be reading his comment different to me. He's just asking you to make a fair comparison rather than cherry picking.

by nymad | 25th Jan 17, 1:02pm 1485302552

I never said they couldn't change their term. I was merely pointing out that you should be basing your comparisons on a standard product - in this case the 3 year term you mentioned.

by Sleepydog | 24th Jan 17, 9:04pm 1485245048

is this normal to raise them so frequently, not that I am complaining.

by CJ099 | 24th Jan 17, 9:19pm 1485245966

Reality has change Sleepy welcome to the Trump Zone! Oh and here are SBS rates as of a few days ago before Mr Trump decided to exit the TPP: http://www.bbc.com/news/world-us-canada-38721056

SBS Bank drops its one year home loan rate by -10 bps to a market-leading 4.19%, raises other 'special rates. Sovereign also raises rates

http://www.interest.co.nz/news/85589/sbs-bank-drops-its-one-year-home-l…

by Zachary Smith | 25th Jan 17, 5:51am 1485276667

is this normal to raise them so frequently

The drivers for a mortgage rate rise or drop would be the same for all banks therefore, yes, this is normal. Interest.co.nz are reporting as each and every bank raises their rate giving the impression that the interest rate in general is going up every week.

by Boatman | 25th Jan 17, 11:28am 1485296921

The banks are turkey peeking .................

by BadRobot | 25th Jan 17, 5:25pm 1485318336

You come to a financial news website and you are surprised that they are reporting interest rates rising as they occur. What do you expect the results from the second race at Westport.

by Kakapo | 25th Jan 17, 5:46pm 1485319593

It's even right there in the name of the website. Totally misleading.

by Zachary Smith | 25th Jan 17, 5:51pm 1485319912

Just making sure people are keeping things in perspective. SBS one year rate is still incredibly low being only 20 bps above the famously low rate of 3.99%. Other increases are very mild. All my current mortgages are higher. Surely this is a matter we can discuss freely?

by THE MAN 2 | 25th Jan 17, 9:12pm 1485331967

Would be more beneficial that we get the race results than publishing that the Co-op Bank has raised its interes rate .1 per cent.
when rates were dropping did we have it published that every BAnk was dropping rates?

by mfd | 25th Jan 17, 9:42pm 1485333773

"when rates were dropping did we have it published that every BAnk was dropping rates?"

Yes.

by Noncents | 25th Jan 17, 7:20am 1485282056

Everyday the OCR is proven to be more and more pointless.

I see what they mean now when they say everyone will be replaced by machines. The Lotto machine can now do the same job as a building full of economists.

by head_down_bum_up | 25th Jan 17, 8:06am 1485284812

OCR doesn't impact rates of 2 years or more so no reason to think these should stay in line with OCR.

Perhaps interest could (has done?) do an article on what drives bank interest rates both lending and saving...

by Noncents | 25th Jan 17, 8:11am 1485285096

It would make for a great article.

I understand the vagaries of rates, but the relevance is really disappearing fast. As evidenced by the fact the last two changes have seen little to no change to the variable rate either.

As for fixed rates. The global interest rates are lower still, the credit ratings have dropped a bit for the big four aussie banks, but not enough to justify these increases.

Are the banks in a bit more of a bother than we are lead to believe?

by nymad | 25th Jan 17, 8:47am 1485287245

I disagree.
If the RBNZ increases the OCR, the rates will adjust upwards. Alternatively, this is a lead signal that the OCR is on the up.

"As evidenced by the fact the last two changes have seen little to no change to the variable rate either."
This isn't a very good basis when you have 25 years of inflation targeting in NZ..

by Noncents | 25th Jan 17, 12:49pm 1485301740

Of course it will go up if the OCR goes up. That's why an article about how they source their funds would be advantageous for us the consumers.

They hike the rates literally within minutes of an increase in OCR, claiming their funding has gone up, yet OCR drops it turns into - "Oh, ah, we source our funds from overseas, local borrowing from the RBNZ only comprises a tiny portion of our overall lending ability"

It has an eerily similar feel to petrol.

Price of oil (OCR) goes up - price of petrol (Rates) go up
Price of oil (OCR) goes down - price of petrol (Rates) stay the same
Price of oil (OCR) stays the same - Price of petrol (Rates) go up.

by sharetrader | 25th Jan 17, 10:35am 1485293749

I suspect you hit the nail on the head, how much of the increases are due to the parent companies being downgraded and there credit ratings now meaning they have to pay more for the funds they need,
on top of report after report coming out calling Auckland housing dangerously over valued

by Noncents | 25th Jan 17, 12:53pm 1485302008

Yeah, the banks look to be in for rough times ahead.

by ECB | 25th Jan 17, 1:16pm 1485303399

US rates are up across the board. US 5yr swap is up over 1 percent since July, so therefore ours is as well. That's what's driving fixed rate mortgage prices higher. Nothing to do the OCR.

by sharetrader | 25th Jan 17, 7:50am 1485283844

you do have to wonder why the pace of increases
http://www.interest.co.nz/news/79616/swap-rates-falling-will-banks-be-b…

by Zachary Smith | 25th Jan 17, 7:59am 1485284394

I agree. It perhaps warrants an investigation to determine if there is some sort of collusion going on between the banks.

by Fintech | 25th Jan 17, 8:16am 1485285404

Back in July when rates went as low as 3.99 on the offer table there was a backroom deal with the main banks that they won't compete below that. Sure enough, now banks aren't really competing against each other anymore - they're all choosy with what customers they would prefer.

by Houses Overpriced | 25th Jan 17, 9:30am 1485289805

Don't forget the inter bank lending rate is going up too

by Rustee1970 | 25th Jan 17, 8:39am 1485286764

In general, Fixed term rates over 2 years are based on wholesale Market interest rates (plus various premiums depending on each lenders own perceived risk in relating to their overall lending portfolio etc)....ie: What our banks have to pay to borrow money from offshore plus risk and margins. These wholesale rates have been slowly increasing since August 2016. The Reserve Bank OCR therefore has very little to do with how Bank's come to their Fixed Rates....OCR is simply an internal NZ rate Mechanism designed to pull unrelated levers for growth, NZ$, trade and treasury, inflation etc.

No real surprise then that (given we have been fortunate that the Bank's kept their Home Loan rates low for as long as they did) that we are finally seeing upward rate movement. News? Perhaps to those that don't follow wholesale rates also....

by bw | 25th Jan 17, 9:04am 1485288254

It doesn't matter what the price of money is (the interest rate) if you have reached your borrowing/lending limit and cannot do any further business. That applies for Households, Commercial Lenders (banks etc) and Countries. Once 'limits' are being approached, what business does get done is transacted at ever higher interest rates as liquidity becomes scarce or dries up.
Higher interest rates might just signal a liquidity squeeze as much as it does a market pricing signal. (The banks are approaching the ability to fund their books in the offshore markets without having to pay a premium to do so)
The major risk to our mortage market probably doesn't come from pricing signals but from liquidity ie: New Zealand's capacity to borrow, into a World that is all trying to do the same thing at the same time.

by Boatman | 25th Jan 17, 11:26am 1485296797

The Banks obviously have issues with funding and the cost of funding , and that maybe why Wheeler has not gone public ?

by THE MAN 2 | 25th Jan 17, 1:03pm 1485302621

Nymad no cherry picking here.
When you are running a business which is what we are doing with our rental properties, you make decisions to best suit your business.
If our loans interest rates fixed were up we would fix at the term and rate that we considered best at the time. End of storey.
The 3 year rates are for the Banks interest not ours