The first 2019 home loan rate reduction has arrived, taking the two year fixed to a market-leading 4.19% level. Eyes are now on rival moves

The first 2019 home loan rate reduction has arrived, taking the two year fixed to a market-leading 4.19% level. Eyes are now on rival moves
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Kiwibank has it the new year running with a new low 2 year fixed rate of 4.19%.

This is a -10 bps drop from them for that term.

This effectively makes this the market-leading 2 year rate, but they share that position with HSBC Premier.

And this drop comes as wholesale swap rates fall in the background. In fact the 2 year swap rate is near its historic all-time low of 1.93%, a level first reached in August 2018 for a one year duration, and now match for two years.

With the spread to swap being 226 bps there may be room for some of the wholesale funded banks to move lower. But this may not include Kiwibank which is primarily deposit-funded. (Kiwibank's 6 month and one year term deposit offer is 3.40% so this probably limits their ability to go much lower.)

At the same time, Kiwibank has simplified its mortgage rate offers, getting rid of the separate "Low Equity Fee" and rolling that into its "Standard rate" offers. This essentially apply to home loans over 80% LVR and are clearly priced at a +75 bps premium to their 'specials'. Kiwibank's "Standard" rates only apply to lending 80% to 90% LVR - they don't lend above 90% LVR except for Bridging Loans. And their Bridging Loans are all +100 bps above their floating mortgage rate of 5.80% (so effectively that equals 6.80%).

Kiwibank's 'specials' are also available for Welcome Home Loans that meet the 80% LVR threshold.

Although this rate is low, other banks offer lower rates still for shorter durations.

The new year may bring more rate reductions from other institutions following the swap rates down. But they may only be opportunistic 'market share' plays by challenger banks. By the other majors we expect a wait-and-see attitude because any significant reduction would probably need to be followed by a shift down in term deposit rates.

Retail term deposit rates, the main source of bank funding, aren't moving at present and arguably, these retail rates are the more important driver of mortgage funding costs.

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 14, 2019 % % % % % % %
               
ANZ 4.99 4.05 4.19 4.29 4.49 5.55 5.69
ASB 4.95 4.05 4.19 4.29 4.49 4.95 5.09
4.99 4.10 4.79 4.29 4.49 5.19 5.39
Kiwibank 4.99 4.05   4.19 4.49 4.99 5.09
Westpac 4.99 4.15 4.09 4.29 4.59 5.29 5.49
               
4.10 4.10 4.29 4.35 4.49 4.99 5.19
HSBC 4.85 3.99 3.99 4.19 4.69 4.99 5.29
HSBC 4.99 4.15 4.49 4.29 4.49 4.99 5.09
4.85 4.05 4.19 4.25 4.49 4.95 4.99

In addition to the above table, BNZ has a fixed seven year rate of 5.95%. TSB no longer has a ten year offer.

Fixed mortgage rates

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28 Comments

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FYI, I was offered 4.14% for 2 years from ANZ

Sub-4% rates for short term mortgages on their way back now.

Can't see house prices going too far down as current interest rates make it easy to pay the morgage.

Opportunity for all FHB buyers and Genuine Investors

https://www.propertyinvestorcentre.co.nz/the-boom-is-over/

Thanks Stuart!!!can't wait!!!!

When did Westpac slip that 4.09 18 month rate in ?

Soon after they dropped their 3.95% 1 yr rate. Edging in a longer lock-in.

Keep that bubble inflating. Last in, first to get into trouble as prices collapse.

Collapse?

Ongoing Asian investment in.... property, particularly from Chinese buyers, is the only thing saving the local market from a “cataclysmic” wipe-out, property developer Michael ­Drapac says. Our market was so ridiculously overpriced that finally the mood and behaviour has started to change,”.... many industry figures are in denial about the state of the market, unwilling to concede they have “bought a lemon”. “Everyone who is invested in any boom doesn’t want to face the reality,” he says.
“The market has corrected a little bit, but I think it has a long, long, long way to go. We’re completely out of whack, ridiculously overpriced and any number of metrics will tell you that…."

Just another opinion of course.

https://tinyurl.com/y9hz5y96

The article you refer to is not talking about housing in NZ

". Our market was so ridiculously overpriced that finally the mood and behaviour has started to change,”.... many industry figures are in denial about the state of the market, unwilling to concede they have “bought a lemon”. “Everyone who is invested in any boom doesn’t want to face the reality,” he says.
“The market has corrected a little bit, but I think it has a long, long, long way to go. We’re completely out of whack, ridiculously overpriced and any number of metrics will tell you that…."

Sure sounds like the NZ/Auckland market...

Maybe it does but the link still does not speak about the NZ market. It's written by "the Australian" and it specifically talks about Australian real estate, not NZ (just a pragmatic comment)

Yes, anybody who clicked the link saw that.. so it was just another example of you burying your head in the sand and saying "It can't happen here, property only goes up in NZ" then was it?

I think Yvil struggles with the concept of comparative analysis. Must be a communist thing.

Yes, it's looking more and more like Ireland before their bubble burst. Look at what's happening in Australia. Similar will start to happen here.

Are you talking about all of NZ or Auckland and nearby?
If you are talking about nationwide the you are clearly wrong!
I am sure that Auckland d market will be a bit suspect for awhile due to current prices!
The reality is that the young ones are heading south to live, and where are they mainly going to be going to?
Correct, Christchurch due to its liveability, climate, affordable housing and everything else that is great about living in ChCh!

Christchurch hasn't got much further to fall until it's in line with prices in small regional towns, which is great for any one looking to buy their first home. Unfortunately It's the crime and Skinheads that you have to watch out for.

TM2, I've lived in Chch for 18 years, the climate is absolutely dismal, freezing with a nasty easterly winds, the Ocean is too cold to swim in. Also it will be another… 15 years? until the City recovers from the EQ, downtown is still full of vacant sites. I would never return to Chch to live

NZdan, you should only comment when you know what you are talking about!
House prices haven’t been dropping in ChCh, they are extremely stable which is the sign of a great market to be buying into.
There have been a huge no. Of As Is houses continued to be sold .
There are several areas in ChCh that have been very popular with first home buyers and obviously suppressed prices.
Do not personally give a rats what you think about the Chch market as you are not a player in it, but what I will say is that people who know what they are doing, can become financially independent at an early age.
When people aren’t buying is when the intelligent are purchasing but then you have to have the nous to be able to do that!!

Christchurch 32 Listings with the keyword Reduced

Auckland 23 Listings with the keyword Reduced.

I'm talking all of NZ. When there's a correction to historical affordability norms, or below,, and there will be, the whole of NZ will feel the impact, including ChCh, even though it's looking more affordable than some other places. In Australia, Perth had already declined after the mining boom ended, and people thought it had bottomed, but now Melbourne and Sydney are tanking, Perth is dropping more. No doubt Auckland, Wellington, Tauranga, Queenstown, Wanaka will see some of the biggest declines, but other places won't escape at all. In Ireland, Dublin was really bad, but everywhere else was bad too.

And your point is?
We have just had our holiday season of a few weeks, and the word reduced is always used in Real Estate to induce people to look!
33 listings with that word is totally irrelevant as to what the ChCh real estate market is doing in regards to sale price!
When the average or median price is down 10% I will agree that prices have dropped!
Rents and house prices are steady as and if you have a fully compliant insulated rental then you are doing just nicely if you are running your rental business professionally!
Some people may be wanting to sell their rental due to this COL policies they are bringing in, but the winners are the ones who remain in the business.
There are winners and losers in every housing market and I will guarantee that anyone buying right in the Chch market will do very nicely over the next few years!
Doubtful whether the sharemarket will hold up anywhere as well, which is a major problem for first home buyers wishing to use their KiwiSave funds for their first home, as balances will be reduced significantly over the last month or so!

House prices in Singapore, Australia, UK and in some cases Hong Kong are dropping.
NZ is a very special place and our house price will be shielded from those external factors. Keep believing in that and you'll be OK.

Below Rv or Under RV are aslo interesting.. particlarly when you realise chch RVs were done in mid 2016. Prices still haven't gone up.

What exactly do you think is going to bring more people to ChCh? The jobs market here is pretty bad in my field. There are for lease signs everywhere on commercial buildings and rents are dropping. Unlike Wellington and Auckland Christchurch is surrounded by farmland ready to be developed and the roading out to these areas is pretty good. I just don't see where the high demand low supply is going to come from.

Delhi, Bombay, Shanghai...anywhere ..who cares........ millions available for import at the drop of a hat. Just watch the pollies buckle to the pressure from the insiders and do nothing (Winston where are you?). Growth growth and growth is all they know.

Taxi drivers and chefs willing to sleep in cars or live 4 to a bedroom. Not exactly Chinese buyers are they.