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State-owned bank raises floating rates out-of-cycle, upping them to match its main rivals. Also raises overdraft base rate to 9.90%

State-owned bank raises floating rates out-of-cycle, upping them to match its main rivals. Also raises overdraft base rate to 9.90%
31st Jul 17, 9:00am by David Chaston

Kiwibank's has today (Monday) updated its website to increase its floating interest rates.

It's floating mortgage rate is up +10 bps to 5.80%.

Its revolving credit rate is also up +10 bps to 5.85%.

And its overdraft base rate is also up +10 bps to 9.90%. (Margins apply above that.)

For perspective, here is the recent change history for Kiwibank's floating rate product:

Kiwibank last raised its floating rate in mid-May 2017. It has raised its floating rate by +55 bps in 2017, as follows:

 change history Change Floating
  % %
Start of 2016   5.65
March 10, 2016 (the -25 bps OCR reduction) 0.00 5.65
March 11, 2016 -0.20 5.45
August 12, 2016 -0.20 5.25
August 16, 2016 (the -25 bps OCR reduction) 0.00 5.25
November 22, 2016 (the -25 bps OCR reduction) 0.00 5.25
January 10, 2017 +0.15 5.40
February 9, 2017 (the no-change OCR decision) 0.00 5.40
March 10, 2017 +0.15 5.55
March 23, 2017 (the no-change OCR decision) 0.00 5.55
May 11, 2017  (the no-change OCR decision) +0.15 5.70
June 22, 2017  (the no-change OCR decision) 0.00 5.70
July 31, 2017 +0.10 5.80

The last bank to raise their floating rate was Westpac, which hiked it +11 bps on June 15, 2017.

Here is a snapshot of the current floating rates offered by key retail banks and their recent change history:

below 80% LVR as at
Dec 31, 16		 as at
Jan 31, 17		 as at
Mar 31, 17		 as at
Jun 30, 17		 as at
Jul 31, 17
      %    
5.59 5.69 5.79 5.79 5.79
ASB 5.65 5.80 5.80 5.80 5.80
5.64 5.79 5.90 5.90 5.90
Kiwibank 5.25 5.40 5.55 5.70 5.80
Westpac 5.65 5.65 5.75 5.84 5.95
           
5.55 5.55 5.65 5.75 5.75
HSBC 5.59 5.59 5.59 5.79 5.79
HSBC 5.59 5.54 5.79 5.79 5.89
5.54 5.54 5.65 5.80 5.80

We are not aware of any compensating term deposit rate changes from Kiwibank.

All current mortgage rates are here.

All current term deposit rates are here and here.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

12 Comments

by  bw  |  31st Jul 17, 9:54am 1501451692

How long until stressed borrowers start blaming their banks for 'unreasonable terms' by hiking their mortgage rates? "You lent me the money, so give me a break. It's not my fault YOU raised interest rates, it's yours" is likely to start doing the rounds in the not to distant future. Banks are going to be easy targets given their recent 'predatory' performances.....
http://www.afr.com/business/media-and-marketing/tv/commbank-not-to-blam…

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by  Houses Overpriced  |  31st Jul 17, 10:05am 1501452332

Oh my... where is mr. Key, who claimed that interest rates will stay low for the foreseeable future

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by  Boatman  |  31st Jul 17, 10:12am 1501452756

Margin Squeeze ?

This occurs where Banks come under pressure and find room to lower rates paid on retail deposits has run out.

GOOGLE :- Margin squeeze in Dutch Banks for more info

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by  MortgageBelt  |  31st Jul 17, 10:19am 1501453181

KB floating rate is still lower than Westpac and BNZ.

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by  bw  |  31st Jul 17, 10:26am 1501453614

As per mine above. It's likely that all local banks are headed back to the historical 'norm' of 7.5%, floating, to give themselves some 'headroom'. Most people will and can pay it. Those that can't ( the Squeaky Wheels!) will be given 'grace' to have lower rates applied. It keeps the banks balance sheets clean , and once again, will be paid for by the 'good people'.

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by  MortgageBelt  |  31st Jul 17, 10:33am 1501454024

7.5% floating? That would be difficult for many Aucklanders who have borrowed for an inflated house price over the last 5 years.

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by  Boatman  |  31st Jul 17, 11:13am 1501456384

Yes it is but the point is that I suspect the Banks are looking down the barrel of Margin Squeeze in the not too distant future as their ability to pay less for deposits is eroded .

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by  Boatman  |  31st Jul 17, 11:07am 1501456070

Given that floating rates were around 5,25% not that long ago, an increase to 7,5% is a BIG jump in installments for many indebted households , and businesses where the family home has been hocked to fund a business

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by  Rob  |  31st Jul 17, 5:35pm 1501479341

People knew the risks when they went in. Considering that interest rates dropped a few percentage points pretty quickly after the GFC, people should have known that the record low rates were not sustainable very long term. All they have really done is push house prices up due to people being able to afford to service a larger mortgage. But the music does eventually stop.

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by  MikeM  |  31st Jul 17, 7:05pm 1501484741

If the current slide in loan demand continues rates will go in reverse before long.

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by  MisterB  |  31st Jul 17, 7:08pm 1501484921

Why?

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by  Bobster  |  31st Jul 17, 7:14pm 1501485255

Why? House prices aren't part of CPI? They didn't put rates up to restrict prices, they won't drop them to support prices. The OCR will only drop if there is a material deterioration in wider economic conditions or to keep inflation in the band. House prices could tank, that in itself is of no concern to the RB. Anyway, 60% of bank funding is from offshore and is not at OCR, so we will pay whatever the going internationsl rate is.

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