Westpac launches 4.94% three year fixed home loan rate, lower than all its main rivals, nearly as low as HSBC's three-year 'Premier' rate

Westpac has announced a new low three year 'special' fixed mortgage rate of 4.94%.

This rate is lower than all other offers from all its rivals for this term, even its main rivals - except the offer from HSBC Premier.

The new Westpac rate is a reduction of -15 basis points, and the same change applies to the bank's three year standard rate.

Westpac has slightly tighter conditions for its 'specials' than most other banks. Westpac requires a minimum of 20% equity, salary credit to a Westpac transaction account plus one other Westpac NZ product, to be approved or issued prior to draw-down date. These special fixed interest rates cannot be used in conjunction with any other Westpac home loan offers or discount packages, including previously negotiated offers, legal fee contributions or the Westpac Choices Home Loan with Airpoints.

And these special fixed interest rates do not apply to loans for business or investment purposes.

Only HSBC Premier has a lower carded three year rate in the market at this time, at 4.89% which is just 5 basis points lower than the Westpac rate. Many borrowers will find the Westpac offer easier to comply with, however.

This is the latest rate reduction by banks competing for Spring home loan business. It is a tough environment this year, with house sales transactions particularly low.

ASB recently announced a sharp one year rate.

And ASB followed the dramatic new rate offer of 3.87% by HSBC for an 18 month fixed home loan term, which is the lowest home loan rate in the market, ever.

Not all banks are responding with sharper rates. For example, Kiwibank is offering a free holiday in Samoa with every loan of $200,000 or more applied for by November 26 and drawn down by January 18, 2018. That includes return flights for two adults to Apia, flying economy with Air New Zealand on a Seat + Bag ticket, five nights in an Ocean View Room at Taumeasina Island Resort, with daily buffet breakfast for two, return airport transfers in Samoa for two adults, complimentary use of snorkel gear, kayaks and catamarans, and 1 GB of WIFI per day for two adults.

The Spring house selling season may be a challenge for both real estate agents and bankers because transaction volumes are very low. Winning market share off rivals may be the only way business plan budgets can be achieved.

These changes come as wholesale swap rates start to rise again. More rises in these base rates are expected today following Wall Street's moves at the end of last week.

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

Here is the full 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 
as at October 1, 2017 % % % % % % %
               
4.99 4.55 5.15 4.69 4.99 5.89 6.09
ASB 4.95 4.39 4.60 4.69 4.99 5.49 5.69
5.35 4.59 5.05 4.69 5.09 5.89 6.09
Kiwibank 4.99 4.55   4.65 5.09 5.75 5.99
Westpac 5.25 4.59 5.15 4.69 4.94 5.89 5.59
               
4.80 4.55 4.69 4.69 4.99 5.55 5.75
HSBC 4.85 4.19 3.87 4.29 4.89 5.29 5.59
HSBC 4.99 4.59 4.85 4.69 5.09 5.49 5.85
4.85 4.55 4.65 4.69 4.99 5.55 5.69

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

And TSB still has a ten year fixed rate of 6.20%.

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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38 Comments

interesting will we now see rates drop as the volume is no longer there and they try to take market share off each other

Not that hot really. The only reason you would fix for 3 years instead of 2 is if you think higher interest rates are coming. And they would have to be a fair amount higher in that 3rd year to make up for the extra 0.3% you paid in the first 2 years.

Yes, I think the 1 year rate would have to be 5.44% come October 2019 for you to break even.

"Cui bono?"

Time for all real estate agencies to slash their commission fees. It seems odd that their rates are rarely adjusted out of sync with one another, irrespective of the prevailing market.

A seller would be well advised to play the agencies off against each other and negotiate a reduced commission. Put the selling process up for tender with three different agencies and play hardball. Should be quite good fun.

Yeah great idea, negotiate the lowest possible fee guaranteeing absolutely no motivation to actually sell your house. Not an awesome strategy.

Yes you are right, offer to pay them twice the standard commission! What was I thinking?
(For the first time I find myself tempted to accuse a commenter of being an agent...)

wait, what? I am not sure if you understand the model.

Presumably most would rather take a 20% shading on commission and sell the house than than zero percent because they couldnt list it.

I'm not sure there's ever been empirical evidence that a higher commission = higher selling price. They are after speed to sell. Arguably a lower commission leads to lower sales price but same net proceeds to vendor and quicker sale.

Yup and if they had a keen buyer with cash ready to go are they going to steer them towards the house they get 3% on or the one they get 2% comission on, everything else being equal?

I conducted a wee experiment on the sale of my last house where I offered the agent a very high % commission once it reached their market appraisal value. If it was to sell for less than their appraisal, their commission was to be considerably less. I was a little supprised to see their marketing campaign didn't appear to change at all. It ended well for both parties as the house sold well, though by the agents own admission, they believed they could do very little to influence a higher sale price...

trexjr, did you end up paying the higher commission? I must admit after I wrote my comment abobe I spent some time pondering if actually offering a higher commission would work. It would be well worth it if if they got much higher than expectations as I usually find I have a better idea of what a property will sell for than the agents. I once renegotiated a commission once they got a buyer. This is where you are in a strong position if you are not in any particular hurry to sell. They have a buyer but you don't mind waiting. They will knock off a few thousand in this scenario.

Yes paid quite a lot more commission in the end as the house went well above the appraisal. Was happy with outcome. My thought process was I wanted the agent to really push the property. Appraisal was slightly above what I would have accepted so just went with it. The std commission set up is a bit of a have in my view as the bulk of commission is payable regardless of the sale price. I had them pay all advertising etc and structured the commision so that if it went for less than the appraisal they would only have a modest return on their outgoings. Once appraisal figure was reached I had a generous % on any money above that figure. We had 5 serious bidders. Whether the agent got them there or not who really knows but at the end of the day the house sold well. If it wasn't to have reached reserve there'd have been none of that auction sale pressure to drop said reserve as you often see. In that case they would have had next to no commision. Was an experiment as I said and I'd do it again. If nothing else it was nice to have a feeling that they were actually working for me and not just themselves...

Cuts in the 6 month, 1 year, 2 year fixed bracket are probably of more interest to borrowers.
How about a 4.3% on 12 months?

Agree! What a smoke and mirrors move from Westpac - lower the rate no one wants to a marginally better rate than others. It's only 0.05% lower than ASB and ANZ and their 1 year rate is 0.16% worse than ASB. Calculator anyone?

Has there ever been a better time to buy your own house in Gisborne, Wanganui, Gore, Buller or Invercargill? Only about $100 a week.

Is there ever a good time to buy a house in Gore?

I kid, I kid.

Clearly rhetorical.

WOW the money gets ever cheaper! In the coming housing slump not even cheap money will fix it. The worst thing is that in the midst of the next slump it will be even harder to get finance at even cheaper rates than these!

Why is a housing slump inevitable? Did you not read about how many people were earning 200K or more in Auckland? I reckon one of my tenants household income is above 300K.
Doesn't cheap money make rental returns look quite good?

and how many don't earn 200k a year....your Indian taxi drivers perhaps.

So...when the Auckland median household income is around $75,000 we're relying entirely on those who have a household income >$200k?

We're relying on the top decile out of ten to buy all the houses.

To buy a large chunk of them certainly. However there must be many households with high equity, or who have inherited money, or who buy investment properties where the actual household income is not so cripplingly significant. The 75K households that have no cash and no equity are a significant minority of purchasers in the Auckland region.

One factor I haven't seen discussed is the amount of money Chinese families got from the sale of their apartments in China. Many old Chinese people were given apartments by the government as they were the most revered of people under communism being state workers. This must have transferred a lot of wealth.
Basically a huge number of people in China were placed on the property ladder by the state. Their children also have high property ownership rates. Along comes globalism and the rest is history.

For some Kiwis now the only choice is renting in Auckland or purchasing somewhere else in NZ. I really hate this expression but "it is what it is". Opportunities do abound for making a good living though.

So, buyers already in the market or foreign buyers (who National insists are not a factor, another area in which everyone realises they're lying again).

Along comes globalism and the rest is history..."it is what it is"

That's where I think things are changing and are going to change further, providing National cannot push things into the irretrievable in the meantime. It's already starting to seem like gobalism is not being viewed with the same rose coloured tines by all, and some are starting to highlight that imperialism has not disappeared, it's simply changed.

Young Kiwis don't have to necessarily accept what their older generation politicians have created, and we're seeing increasingly angry movements across the globe, reacting against the oft unbalanced costs/benefits being delivered by globalisation.

Point being, I don't think National's neglect of the housing crisis will necessarily have positive effects on NZ's society and culture over the next few years, and I see no obligation on young Kiwis to simply accept it.

We already have plenty of calls for limits or even bans on foreign buyers, so I think more Kiwis are becoming aware that investors are banking on foreign buyers coming in to bid up house prices, and indeed want this to happen - at the cost of other Kiwis. You only have to look at the simple example of China to see clearly that property ownership is not a requirement for foreign investment to occur.

I think you are going to be rather disappointed with the younger generations who are hopelessly in the thrall of the current Western system and receptive more than ever before to mind control. This trend is set to get worse not better, honestly, it's like living in some dystopian science fiction novel. For Boomers to choose to take the red pill while they are mostly living in this wonderful jet setting and affluent age is a big ask too.

Eh, any civilisation has prospered or otherwise based on the opportunities it affords to folk. There are plenty of angry young people out there, and there are plenty who haven't yet twigged why they're facing a worse lot but are starting down that path.

I definitely agree things will get worse before they get better.

(And yeah, mind control, fake news and the role of AI in this is a fascinating area.)

I question whether we are actually a civilization.

Certainly civilised in the Koru lounge today. Does that count?

No time for the Koru they dont have big bottles of Lion Red.

"The 75K households that have no cash and no equity are a significant minority of purchasers in the Auckland region." /

State the obvious! They're in the minority of purchasers because it's not possible at that level. They are majority of people though. The issue is - how long can the minority of people prop up property prices? That's why sales numbers are continuing to slide.

Things will take a natural course so what's the problem? However such people could rent and work in Auckland and later buy a house in Gisborne or somewhere and retire if they invest their surplus cash wisely. It's not an apocalyptic scenario necessarily.

Makes it important that we have a government that is willing to reform tenancy laws, in that case. For people to live and work and rent viably in Auckland for long periods of time will require security of lifestyle.

I don’t have rental properties and don’t expect to, but if I did I sure as heck wouldn’t let myself be tied down into a long term tenancy. Air BnB at best.

Not really - this is one bank undercutting the competition by 0.05% on one fixed term. Click bait...

I’m not sure it’s a good idea dropping rates this early considering there isn’t that much that the banks can drop by. Maybe they think they could stop this downturn before it goes to far but I can see it happening. In 2008 rates dropped from about 9% to I think there lowest was 4.19%. And still the market was really low to the change of foreign ownership to housing in 2011 1012. Investors have taken on massive risk because they took on loans at such low interest rates giving themselves very little help in a downturn because rates are already low. I think banks are wasting there ammo for when they might better need it. Remember the RBNZ is at a all time low now. And nz banks really go under 4.19%. Be careful this downturn is going to stick and every different angle you look at this downturn is it heaps worse here in nz than the 2008 GFC

Median Salary - A$46,428 and Negatively Geared Investors at that Salary - 62%.

$46,428! ( I assumed the Aussie median would be way higher than that!) and 62% of them that are investors are NG'rd?!

"RBA financial stability review warns of investment property risks"

http://www.afr.com/content/dam/images/g/z/0/c/y/7/image.imgtype.afrArtic...

http://www.afr.com/news/economy/rba-financial-stability-review-warns-of-...

There are a lot of fixed rate mortgages coming due over the next few months that all were well,over the 5 per cent.
Rates as I have said for a long time are not going to go North and we won't see 6 per cent again, but there were many on here that said they were going to go to 8 and 9 per cent.
If you want to be financially successful I suggest that you tap into people that have a proven track record for predicting correctly and also,investing.
You can bleat on as much as you want about overpriced houses in NZ but medium term they are only going to go,up.
I can guarantee that if Capital Gains Tax does come in, then house prices will rise as well as rental prices.

I wish interest rates were going up because like the ones that probably said it thought housing was going to keep going up so the RB would have put rates up to slow the market like LVRS. But the sad truth is the market has gone to far with miles to much debt and risk with major players gone like overseas investors, so naturally rates are going down. It’s a sign of a falling market and the banks know it to well, I’d say they’re very worried . Banks would know only to well whos applying for loans, how much they earn and can pay back on today’s house prices and they’d be shaking in there boots