We are now in the depth of the Winter mortgage season. Wholesale swap rates have turned up recently. Banks are pulling back on their 'specials', keeping powder dry for the upcoming Spring campaigns

We are now in the depth of the Winter mortgage season. Wholesale swap rates have turned up recently. Banks are pulling back on their 'specials', keeping powder dry for the upcoming Spring campaigns

Home loan rate change activity over the past week has been relatively low.

Most changes are bank moves that just tweak pricing points in a minor way.

The biggest single move was from Westpac who withdrew their 18 month 'special' rate of 4.09%, reverting to their standard rate for that term of 4.79%.

Kiwibank also let a rate rise, this time their two year fixed rate, taking it up from 3.85% to 3.89%. That is interesting only because it takes their rate for this term above the level offered by the other main banks.

ANZ took -4 bps off its one year rate, dipping it to 3.85% and matching almost all its main rivals. Westpac did the same.

Getting ready for next week, SBS Bank has taken -10 bps off their two year rate, taking their new offer down to 3.89% which is now the same level they offer for one year and eighteen months fixed.

And TSB has changed its carded rate for two years fixed, down to 3.85% which is a -14 bps reduction. That takes this rate down to the price match promise level they have been operating. But that promise is due to expire this weekend. The TSB rates in the table below are on the basis that it is not extended.

There are now only eight or so weeks to go until banks will start their Spring season campaigns and it makes sense for them to let rates drift higher now, so that any 'specials' they release then look juicier. In the depth of the Winter season there is little to lose by having a rate card that is marginally off the pace. So we may see more 'specials' come to an end "naturally" over the next two months. That drift higher might get a boost however if wholesale swap rates rise.

Over the past week, wholesale swap rates have started rising again and are up by between +5 and +7 bps in just seven days. But for all of June, despite these recent upturns, they are still down by between -7 and -15 bps. Benchmark bond markets are hesitating before deciding which way their next drift will be - although dovish signals from the US Fed and the US economy (not to mention the trade war) tend to suggest they are unlikely to shift higher any time soon.

See all banks' carded, or advertised, home loan interest rates here.

Here is the full snapshot of the advertised 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 1, 2019 % % % % % % %
               
ANZ 4.49 3.85 4.19 3.85 4.05 4.85 4.95
ASB 4.49 3.89 3.89 3.85 4.05 4.35 4.45
4.99 3.85 4.79 3.85 4.05 4.35 4.45
Kiwibank 4.99 3.85   3.89 4.09 4.29 4.39
Westpac 4.99 3.85 4.79 3.85 4.05 4.35 4.45
               
Co-operative Bank 3.89 3.89 3.89 3.95 4.05 4.35 4.45
China Construction Bank 5.15 5.10   3.65 3.90 5.30 5.30
ICBC 4.85 3.85 3.99 3.95 3.89 4.29 4.39
HSBC 4.85 3.79 3.79 3.79 3.89 4.19 4.29
HSBC 4.99 3.89 3.89 3.89 3.99 4.49 4.49
4.85 3.95 3.99 3.85 4.05 4.45 4.55

In addition to the above table, BNZ has a fixed seven year rate of 5.95%.

Fixed mortgage rates

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Why are BNZ and Westpac 18mth so far out of whack?

Doesn't make much sense when the next longer and short terms are both the same.. so you'd be an idiot to lock it in for 18mths when you can get a better rate for 24mths. (unless you planned to sell or refinance somewhere in the 18-24 month timeframe)

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