In a lacklustre real estate and mortgage market, another bank cuts a key rate to generate some momentum and snare some market share even as funding costs remain stable

Kiwibank has announced it is matching BNZ with a 4.49% two year fixed 'special' mortgage rate.

This comes after Kiwibank ended its $2,000 cash-back promotion, and after BNZ launched the same rate on Tuesday, March 6, 2018.

This is the most popular fixed term, and tightens the competition in a mortgage market that is operating in a dull real estate sales environment.

Barfoots in Auckland posted modest sales volumes in February, and the REINZ will report national sales numbers on Wednesday, March 14, 2018 and they are not expected to show strong volume growth.

RBNZ data also confirms that mortgage market value growth is also modest, with a fall-off in volumes to property investors, partly made up by small rises to first-home buyers. But that data is only out to January; the February data is not due until March 26, 2018.

The Kiwibank rate reduction is a drop of -16 basis points.

This new rate is the lowest two year rate by any major bank. But TSB has a lower 4.39% rate for that term, and HSBC Premier offers 3.95%.

Kiwibank last had a two year offer this low (4.39%) over a year ago on 10 January 2017.

Kiwibank 'specials' are only available when you have at least 20% equity in the property provided as security. Unlike other banks, they don't have transactional account requirements as a condition, and they do offer these 'special' rates for customers who use the Welcome Home Loan product.

The overall leader with the lowest two year rate is still HSBC Premier who burst on to the market with its sub-4% rate offer two weeks ago. HSBC Premier offers come with restrictions that are unusual in the New Zealand market.

Wholesale rates have been stable for durations of two years and less for all of 2018.

If you are in the market for a mortgage, or a rollover, now is a good time to negotiate.

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 February 16, 2018 % % % % % % %
               
4.99 4.35 5.15 4.65 4.99 5.89 6.09
ASB 4.95 4.30 4.39 4.65 4.89 5.39 5.59
5.35 4.39 5.05 4.49 4.99 5.89 6.09
Kiwibank 4.99 4.35   4.49 4.99 5.65 5.69
Westpac 5.25 4.39 5.15 4.65 4.94 5.89 5.59
               
4.80 4.39 4.69 4.69 4.99 5.39 5.59
HSBC 4.85 4.19 4.19 3.95 4.89 5.29 5.59
HSBC 4.99 4.35 4.59 4.64 4.99 5.49 5.55
4.85 4.49 4.65 4.39 4.89 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?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a 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.

10 Comments

Using your calculator , $ 2000 cashback is $ 83 a month for 2 years , a reduction from 4.65 % to 4.49 % ,on $ 560 600 ,saves $ 54 per month , so the $ 2000 cashback was a better deal .

While this is true most banks typically still offer a cashback payment on settlement of new lending, even if it is not advertised. So today you may be able to get 4.49% P.A and $1500+ on cash. I'm unsure if Kiwibank does this, but to my knowledge all the other big banks offer $1500+ on any new mortgage with lending of $100k or more

You're forgetting the compounding interest you get from receiving the cash up front.

I popped the numbers into a mortgage calculator with $450k principal ($448k after CB) and $40k repayments a year. After two years the cashback deal shaved $1102 off the principal.
There may be strings attached to the cashback too but it seems like the winner.

Every time there is talk of rates potentially going up, they seem to come down.

And prices continue to rise, as lower interest rates mean people can afford to borrow and pay more money

Until it does go the other way.

Soon. The popcorn is on me.

Not too soon I hope - I want to get the mortgage down below 6 figures first.

Recently refinanced for 1 year fixed at 4.09% and $10,000 cash back when moving from another bank to ANZ - got offered similar from BNZ too.

$10k cash back? Must be a very sizable loan.