Challenger bank adjusts its rate card lower, matching the market as new residential real estate transactions struggle to build to normal Spring volumes

Today has brought what now is a rare home loan rate change.

They have been notable by their absence recently.

SBS Bank has trimmed three fixed rates.

It has reduced its 18 month fixed rate by -16 bps to 4.69. This makes it more competitive for that term, but this new rate is not the lowest carded rate on offer. ASB has a 4.60% offer, TSB has a 4.65% and HSBC's Premier offer is priced at a market-leading 4.19%.

SBS Bank has reduced its three year fixed rate by -10 bps to 4.99%. That removes it from being a market anomaly with a three year rate over 5% leaving BNZ sticking out in that way.

And SBS has reduced its five year fixed rate by -16 bps to 5.69%. This isn't as low as either Westpac or HSBC Premier who have a 5.59% offer for that term, but it certainly is competitive.

None of today's changes are market-leading by SBS Bank, but they do reflect where others are in pricing rates for those terms.

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. We will see just how low when the REINZ releases its October sales data in the coming week. Winning market share off rivals may be the only way bank business plan budgets can be achieved.

There is clearly more residential property being brought to market as listings, and we are seeing a seasonal uplift in auction events. But actual transactions are clearly harder to agree. The new Government has not cleared away market uncertainty by committing to major supply-enhancing moves, especially in Auckland.

The market is so far away from the froth and exuberance of this time last year that the RBNZ is even sending signals that its LVR restrictions might be eased somewhat.

Across the Ditch, some banks are getting desp[erate in a declining market. The AFR is reporting that NAB (BNZ's parent) is bundling new credit card deals and 100,000 bonus points offers, which is enough for AU$500 in vouchers from major retailers. Adelaide Bank is to launch a no-fee 3.75% 'Smartfit' owner occupier rate for principal and interest borrowers with a 20% deposit. It's what happens in a zero-sum environment.

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 November 11, 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 4.99 5.75 5.69
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 4.19 4.29 4.89 5.29 5.59
HSBC 4.99 4.59 4.69 4.69 4.99 5.49 5.69
4.85 4.55 4.65 4.69 4.79 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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15 Comments

Just received a 4.39% 1 year offer rate from one of the big 4.
I sense more special offers coming from the short- term fixed rates going into summer.

Similar rates to what Japanese banks were offering to corporate employees back in 2007. Each mortgage came with an insurance policy protecting the household unit for being liable for the remaining principal and interest should the primary income earner die or had to leave work through illness / injury.

Banks are nervous about people in no rush to buy homes and get a mortgage due to the obvious property crash coming. So there is great competition to offer the very best deal they can to the few willing to risk buying a home now and losing massive amounts of equity .

SBS still not leading any terms... let's not read too much into a very small player marginally decreasing some rates

That's the standard ASB special rate.

A soft property market and low interest rates.

Could be a good time to buy.........

TTP

...or could be a good time to sell?
The Market isn't 'soft' for no reason. Everything that's known or expected is in today's market action/prices. That's why the market is always right! What isn't in the market price is what we don't know, that's all....

TTP = Taking The Piss, surely?

This time last year there were many on Interest.co that were saying that imterest rates were going up and they were predicting at least 8 per cent!

“The Man” expressed his opinion that we wouldn’t see 6 per cent for a hell of a long time if ever!

Looks like he may well be right!

There were also many that said that house prices would continue to increase... go ahead, follow the herd. MOMO investing works great, until it doesn't. And when it doesn't it really doesn't!

Not sure I recall anyone saying 8%, let alone 'many'. But happy to take links.

This change from SBS does not change the upward trend since this time last year:

1) SBS 3yr rate exactly 1 year ago was 4.35%. Now it's 4.99%. 4.99% is higher than 4.35%
2) ANZ, BNZ, Westpac, SBS, CO-OP and some others all have interest rates with a 6 in front (5yr fixed) and the average variable rate is a shade under...

Or we could raise rates and let Savers and women not work, but take over from the man and ...Houses..
The way it used to be.

QE...QED.

Nuff said.

Why do you say women not work?
Many women love to go,to,work and it makes for a far better balanced society.
You have never been able to live off interest on investments in the last few decades unless you had plenty.

During the down stage of the real-estate cycle usually interest rates start to climb at some point before real estate prices start taking off. This is not happening...yet. Be wary. But be brave, might be a good time to get a price bargain.

2018 will the year for bargains when it all comes crashing down.