Kiwibank is the third bank to adopt 4.19% as its one year fixed home loan rate as the reductions keep coming at the popular end of the fixed term options

Hot on the heals of the SBS Bank rate drop, Kiwibank has also announced a mortgage rate cut.

Kiwibank is also offering 4.19% for one year fixed.

This is a 'special' which requires at least a 20% equity in the property. You need a loan of at least $150,000. Kiwibank 'specials' are also available for Welcome Home Loan options.

They are the third bank to offer this rate, matching both SBS Bank and the original mover, HSBC.

But no one is yet attempting to match HSBC's Premier 18 month rate of 3.85%.

You need to go back to the June - September 2016 period when fixed mortgage rates were this low. Back then, Kiwibank had an equivalent one year rate, but they and others also had even lower rates (down to 4.15%) for 18 month and two year offers. (ASB, BNZ, TSB and Westpac also joined in for some of that time.)

This is how wholesale rates compared at that time:

Swap rates 25-Jul-16 2-Jul-18
  % %
one year 2.10 2.06
two years 2.05 2.14
three years 2.06 2.26
four years 2.10 2.39
five years 2.14 2.53
seven years 2.26 2.77
ten years 2.44 3.02

Up until recently, wholesale swap rates have been reasonably stable, a track that has lasted in all of 2018. But in the past week or so, we have seen a shift lower in these wholesale benchmarks, down about -10 bps as international growth assumptions start to be pared back, and the New Zealand economy wobbles in the expectation of higher Government spending as tax collections start to shift down a gear. The RBNZ said a cut was as likely as a raise in the way they think about their official benchmark.

This shift lower opens up more opportunities for home loan rate cuts by others.

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 July 2, 2018 % % % % % % %
4.99 4.29 5.15 4.49 4.85 5.85 5.99
ASB 4.95 4.29 4.39 4.49 4.79 5.39 5.59
5.35 4.29 5.05 4.49 4.85 5.89 6.09
Kiwibank 4.99 4.19   4.39 4.85 5.19 5.39
Westpac 5.25 4.29 5.15 4.49 4.85 5.89 5.59
4.80 4.29 4.45 4.49 4.85 5.39 5.59
HSBC 4.85 4.19 3.85 4.29 4.89 5.29 5.59
HSBC 4.99 4.19 4.49 4.49 4.85 5.39 5.55
4.85 4.29 4.39 4.55 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 10-year fixed rate of 6.20%.

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I wonder who we will see the first 3.99% 1yr rate from (excluding HSBC)

Yeah it must be tempting for one of the big 4 to get their name on the front page of the paper... Just run it for 2 weeks or something.

It's that time in the 'Credit cycle' where re-mortgaging is more important than the attaining new first time buyer lending and the good rates will get better and better in the scrabble for borrowers with plenty of equity (over 40%). I wonder how many people get turned down for these headline rates over the next couple of years, interesting times indeed. Also watch out for HSBC as they hoover up the very best borrowers in the market while the others just destroy their own operating margins.

Nice 1 year rate, wonder if people will still be crowing when it comes time to 'fix' again in a years time.

Yes they will. Short term rates are not going up in the next 12 months

As I said one the thingy about SBS giving this rate:
"In the absence of any real pricing strategy or product innovation they are all directly competing. This is exactly what every B-School advises against and must surely signal the autumn of good times for banks."

After the Credit crunch, for a brief period I had a mortgage rate that was tracking at 0.79% under the BOE base rate. Base rate was 0.5% for almost a decade, before falling to 0.25% and now back to 0.5%. I just wish I could have kept that rate forever, can you imagine the bank giving you money every month on a house that they leant you the money to buy. that was an hilarious 18 month period.