SBS Bank is the first to change a mortgage interest rate in 2018, cutting their one year fixed by -15 bps. TSB has now matched them. Recent wholesale rate rises don't put special upward pressure on most home loan rates

It's been a long time since any bank changed a mortgage rate in New Zealand. In fact, there have been no changes in 2018.

Until now.

SBS Bank has launched a new one year 'special' at 4.44%.

That is a reduction by them of -15 bps.

This marginally beats all other banks for this term, except HSBC Premier, which still has a 4.19% offer for one year fixed.

Update: TSB has now also reduced its one year 'special' to 4.44%. In their case, it is a reduction of -5 bps.

The lack of movement in rate competition is underpinned by little movement in wholesale rates, especially for rates of three years and shorter. These have hardly moved since October.

We are seeing wholesale rates move up recently at the long end (five to ten years).

But the changes for shorter durations are more modest. Since the start of 2018, there has been no change for the one year wholesale swap rate, the two year is up only +4 bps - mostly in the past few days - and the three year is up only +6 bps.

Five year rates are up +10 bps and that might see one or two of the major mortgage lenders tweak their mortgage rates for that term slightly higher.

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 January 22, 2018 % % % % % % %
4.99 4.45 5.15 4.65 4.99 5.89 6.09
ASB 4.95 4.49 4.55 4.59 4.89 5.39 5.59
5.35 4.59 5.05 4.65 4.99 5.89 6.09
Kiwibank 4.99 4.45   4.65 4.99 5.65 5.69
Westpac 5.25 4.59 5.15 4.65 4.94 5.89 5.59
4.80 4.49 4.69 4.69 4.99 5.39 5.59
HSBC 4.85 4.19 4.19 4.29 4.89 5.29 5.59
HSBC 4.99 4.44 4.69 4.69 4.99 5.49 5.69
4.85 4.44 4.65 4.64 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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Most banks will move lower on their 1 year mortgage carded rates currently.
Around 4.3% - must be some competitive pressure in this space.

Westpac offered 4.3% for 2 years on $1m borrowing with LVR of 50%. Also gave $8,000 cash back (bonded for 3 years).

Surey it's time for floating mortgage rates to come down.

5.95% is very high for floating.
There was a time when floaters were rewarded for taking more risk and floating rates were typically below the fixed rates.

When ?

2000, 2003, 2010, 2011? Cf to 2 yr rate.
“Typically, floating rate loans will cost less than fixed rate loans, depending in part on the yield curve. In return for paying a lower loan rate, the borrower takes the interest rate risk: the risk that rates will go up in future.”
But, yes, in NZ floating has had a high margin most years and the borrower risk does not seem to be rewarded.

So the answer is "fleetingly", during the post GFC period. Since then global QE has driven fixed loans, arguably driven more by offshore events, well lower than historical averages.

The late 90s if I recall correctly.

Was this back when Interest Only mortgages were considered "non-performing loans"?

Maybe the floaters are subsidizing the others.