TSB Bank targets its firepower at the heart of the fixed rate market with a competitive offer at a time most banks are sitting back with rates at least 25 bps higher

TSB Bank has started the week with a very competitive two year home loan rate.

It has launched a 'special' rate of 4.49%, -16 bps lower than the previous rate of 4.65%.

This is the lowest rate offered by any bank for the popular two year term, other than the 4.29% from HSBC for their Premier clients.

The new TSB Bank rate is significantly lower than offers from almost all its rivals. It is a full -25 bps lower than the next highest offer which is from ASB.

And while this is the real estate off-season, it is at a level that will get noticed in the market. Brokers will be keen to use it to negotiate below card responses from other banks, and home owners will be able to use the same strategy. 

As at the time we published this story, we had not received notification of the change from TSB Bank. However, promotion of the rate started on TV on Sunday evening. The new rate is being labeled as 'special' but the specific nature of the special terms are not currently available. We will add them here when they are. TSB Bank 'special' rates require a minimum of 20% deposit.

TSB last changed its mortgage rates a week ago by raising their floating rates. The last time they changed fixed rates was on May 15, 2017, when they reduced their two year rate by -10 bps.

In the wholesale money markets, rates have been low for a long time and the two year swap rate has been at broadly the same level for at least 10 weeks, with most of the slippage to the current levels happening in the first quarter of the year.

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

Here is a snapshot of the fixed-term rates on offer from the key retail banks.

below 80% LVR 6 mths  1 yr  18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
  % % % % % % %
4.99 4.49 5.15 4.85 5.59 5.89 6.09
ASB 4.95 4.45 4.70 4.74 5.09 5.49 5.69
5.35 4.59 5.05 4.74 5.09 5.89 6.09
Kiwibank 4.99 4.69   4.79 5.25 5.75 5.99
Westpac 5.25 4.59 5.15 4.85 5.09 5.89 5.59
4.80 4.59 4.75 4.85 5.25 5.65 5.85
HSBC 4.85 4.09 4.09 4.29 4.89 5.29 5.59
HSBC 4.99 4.59 4.85 4.85 5.25 5.65 5.85
4.85 4.55 4.75 4.49 5.15 5.65 5.79

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

And TSB Bank still has a ten year fixed rate of 5.99%.

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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Great !