A new low fixed home loan rate

Personal Finance

The New Zealand subsidiary of the Bank of China has launched a 3.15% rate for one and two year fixed home loan contracts, setting a new low in the New Zealand mortgage market

18th Sep 19, 6:02am by David Chaston

Lower and lower, that is the continuing track for fixed mortgage rates.

The New Zealand subsidiary of the Bank of China has launched a 3.15% rate for one and two year fixed home loan contracts, setting a new low in the New Zealand mortgage market.

That is a -35 bps and -40 bps cut respectively.

(Rates under 3% seem to be now a market possibility?)

It has also cut its 'special' floating rate to 4.89% by -20 bps. This is the only floating rate below 5% from any bank.

These new rates beat the China Construction Bank 3.19% rates and are substantially lower than rates offered by the main retail banks in New Zealand.

In fact, they have a -50 bps advantage over these main bank for the popular one and two year fixed terms.

China's banks have 'arrived' in the local retail home loan market and the impact will likely be long-term. We will soon release a profile explainer of these banks' presence here

Wholesale swap rates fell in the latest trading session, ending a recent rising turn.

Here is the full snapshot of the advertised fixed-term rates on offer from the key retail banks.

Fixed, below 80% LVR	6 mths	1 yr	18 mth	2 yrs	3 yrs	4 yrs	5 yrs
as at September 18, 2019	%	%	%	%	%	%	%

ANZ	4.29	3.65	3.99	3.59	3.99	4.85	4.95
	4.29	3.65	3.75	3.59	3.89	4.19	4.29
	4.79	3.65	4.55	3.54	3.99	4.35	4.45
	4.79	3.55		3.59	3.99	3.99	3.99
	4.99	3.65	4.79	3.59	3.99	4.35	4.45

Bank of China	3.99	3.15	3.70	3.15	3.79	4.35	4.45
Co-operative Bank	3.69	3.69	3.75	3.75	3.99	4.19	4.29
China Construction Bank	4.70	3.19		3.19	3.19	4.95	4.95
ICBC	5.15	3.79	3.79	3.75	3.99	4.29	4.39
	4.65	3.35	3.35	3.35	3.35	3.35	3.35
	4.29	3.69	3.69	3.69	3.99	4.49	4.49
	4.55	3.85	3.89	3.79	4.05	4.45	4.55

In addition to the above table, BNZ has a unique fixed seven year rate of 5.70%.

All carded, or advertised, term deposit rates for all financial institutions for terms of less than one year are here, and for terms of one-to-five years are here. And term PIE rates are here.

Fixed mortgage rates

Select chart tabs

Source: interest.co.nz

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64 Comments

by Nzdan | 18th Sep 19, 6:25am 1568744741

Does anyone know the prerequisites of obtaining this great rate from Bank of China? I tried having a look on their website but the site must be having issues, all the text came up in Wingdings font.

by Kezza R | 18th Sep 19, 7:16am 1568747811

Crashed in the rush.

by tothepoint - d… | 18th Sep 19, 11:05am 1568761501

Expect to see lower rates from the Aussie banks.......

TTP

by MisterB | 18th Sep 19, 5:13pm 1568783596

Not to these levels. These Chinese Banks are struggling to stay viable.. they can only push rates. They are not funded with NZ retail deposits, as the big 4 and Kiwi + TSB are.

by Pragmatist | 18th Sep 19, 7:34am 1568748862

Literally all it says on the English language part of the website on the home loan page is: "Home Loans are secured by mortgage over residential properties. A home loan can be provided for purchasing an owner occupied property; or for purchasing an investment property; or for refinancing an existing home loan; or for any other purposes approved by the Bank."

The last interest rate press release page says:
Conditions that apply to all special interest rates: BOCNZ fixed home loan special interest rates require a minimum of 20% equity in the security property provided to BOCNZ. These special rates are also subject to the general conditions listed below.

General conditions that apply to all interest rates: Interest rates are subject to change or withdrawal at any time without prior notice. BOCNZ's lending criteria, terms, conditions and fees apply. An early repayment adjustment may apply if you break an existing fixed interest rate period."

by Nzdan | 18th Sep 19, 8:10am 1568751009

Ah good, forgive me I was on my mobile phone was difficult to navigate thought it might be because my phone isn't Huawei. Thanks for providing that information.

by Averageman | 18th Sep 19, 11:08am 1568761689

Those conditions for low rates would be pretty similar in most banks surely...?

by nymad | 18th Sep 19, 8:34am 1568752485

I fear there may be a significant informal barrier for anyone who cannot converse and read Mandarin/Cantonese.

Purely a coincidental thing, though. The only suitably qualified staff they could find just happen to not speak an official language of New Zealand.

by Lanthanide | 18th Sep 19, 2:31pm 1568773889

If one of the qualifications is "a deep understanding of Chinese culture" then this isn't necessarily racist.

by frazz | 18th Sep 19, 10:29am 1568759359

Should not be able to conduct business here in NZ if they cannot speak English!

by youngdumbandbroke | 18th Sep 19, 10:38am 1568759925

they could argue we should speak mandarin when we conduct business in China

by Pragmatist | 18th Sep 19, 10:46am 1568760379

And if you set up a retail store in China you probably should..

by frazz | 18th Sep 19, 10:48am 1568760502

I doubt you would survive in China without speaking Mandarin?

by youngdumbandbroke | 18th Sep 19, 10:51am 1568760702

or just hire someone who can

by frazz | 18th Sep 19, 10:53am 1568760789

Exactly - so my point being they should have English speaking staff in NZ? Or do they only do business with Chinese?

by youngdumbandbroke | 18th Sep 19, 12:25pm 1568766331

I think as long as they offer a good product, theyll find a customer

by MisterB | 18th Sep 19, 5:17pm 1568783840

'A' customer may be spot on. A reasonably small loan book that has grown at half the market rate in the last year.

https://bankdashboard.rbnz.govt.nz/orgs/BOC

Wonder how strict their credit policies are? These outfits (BOC, CCB, HSBC) tend to cherry pick the deals they want and are not mass market. All it does is make noise on forums like this. DC often forgets to point out that HSBC and CCB dont even lend under $500k

by David Chaston | 18th Sep 19, 12:01pm 1568764888

I have met mid level managers at Bank of China and they speak fluent Engish - perhaps better that some whose English is their first language.

by Houseworks | 18th Sep 19, 7:23am 1568748199

Lower mortgage rates also mean lower deposit rates. Other than bank TD are there still any low risk investments that pay a reasonable return?

by bw | 18th Sep 19, 7:35am 1568748901

The lower Term Deposit rates go, the 'happier' we all should be!
Yes, the income return will be lower than we have been used to, but in all likelihood, the purchasing power of the principal invested will be more when the deposit matures. It will take time, and probably several roll-overs of short term deposits, but sooner rather than later, as a deflationary wave sweeps the globe, today's saved money will buy more of tomorrows goods and services. ie: the prices of all things will fall....cash (interest rates), property, art, shares...you name it...they're all in the same basket. The only 'casualty' will be debt holders, and that is what 'they' are fighting so hard to avoid.

by HeavyG | 18th Sep 19, 9:03am 1568754214

As TD holders start eating their principal I don't know how happy they'll be. Their happy dream was to live off the interest and leave a nest egg for the kids, that ain't gonna happen now.

Also the assets you list are not in the CPI basket, property, art, shares... as cash gets cheaper as RBNZ seeks to stimulate CPI the price of non-consumables increases e.g. see gold and silver https://www.interest.co.nz/saving/gold-spot.

by bw | 18th Sep 19, 9:51am 1568757084

I don't plan on being the richest corpse in the cemetery! I plan on spending the last cents of my money on the nails for the coffin (tricky, timing, I'll admit!), and as for 'the kids'? They'll be fine if we've done a decent job of educating and providing for them whilst we are here - just as we have been. I won't get anything from my forebears, and neither should my offspring rely on anything from us, either - I've told them so! ( and, yes, we are still on speaking terms!)
Savings are for spending at various times of our lives. That's' what they are - retained income, and drawdown of the principal should be part of any plan.
Oh, and that CPI you note - that's going to fall as well, as wages decline ( they will in nominal terms, but not in real) and the cost of production/sales translates into lower consumer prices. That, and as people, in general, pull back from spending, make prices fall on their own.

by HeavyG | 18th Sep 19, 10:20am 1568758811

Why will nominal wages fall?

by bw | 18th Sep 19, 10:33am 1568759603

If ( when?) your current Employment Contract expires, and your employer says to you " Look, HG, things are tough. I'd love to keep you on, but I can't afford to pay you the current rate. I can afford your current pay rate less 25%, or I 'll have to let you go. Sorry about that" what are you going to do? Move? Where to and for how much, to compete with others in your situation.
Sure, maybe that won't be 'you' but it will be many others, and that is what will start the fall in nominal wages. That's what a deflationary environment creates...and...it's coming. Surely you can feel it? No? Well here's an old African expression, "By the time you can smell the lion, it's too late"

by GGP | 18th Sep 19, 11:02am 1568761377

Your overall point, which is that wages will decrease, may well be correct.

You are wrong that it can happen so quickly and easily, though. Most employment contracts right now are not fixed-term and therefore do not expire. To reduce someone's pay, you would need them to consent, and if they don't, you will need to through a formal restructuring process to either reduce their pay or get rid of them. Doing that process correctly will take several months. (Starting the process with "Either take a pay cut or you're fired" will mean you have not done it correctly.) If you try to take shortcuts, you will get taken to the Employment Relations Authority, where everything you tried to do will get reversed, and the employee will get additional compensation on top of that.

by Pragmatist | 18th Sep 19, 11:06am 1568761574

" If you try to take shortcuts, you will get taken to the Employment Relations Authority, where everything you tried to do will get reversed, and the employee will get additional compensation on top of that."

Followed by the compnay becoming insolvent and the employee being rout of work anyway. (If things get to that stage)

by GGP | 18th Sep 19, 11:21am 1568762474

Good chance of that, yes. Of course, the employee will be happy to squeeze a few more months of wages and more time to line up another job.

The employer probably won't be as happy. The lesson being that, if you think they are going to need to downsize, get started on that now, not when you're on the brink of collapse.

by HeavyG | 18th Sep 19, 11:56am 1568764604

Interesting fairy tale. Wages did not fall during the GFC and in light of how cheap money is now there is no indication they will drop anytime in the future. Given the low rate of unemployment and cheap money sloshing around (with more to come) I doubt many employers are laying off staff or threatening pay cuts as you suggest.

Do you have any data to support your... "prediction".

by frazz | 18th Sep 19, 10:45am 1568760311

Well yes unlike your forebears who left the ladder down you have pulled it up and speak like a typical boomer - all for me - me - me. Bugger off and pay for your student loan and house. All you Boomers ned to get out there and spend spend spend! Save our economy and the World.

by bw | 18th Sep 19, 10:36am 1568759760

Ummmm.... many of us, me in this case, are paying at both ends. For our aging parents and our children's expenses. But that's an aside...
What I am arguing for is what you are frustrated about - the costs lumped on to our children and the biggest cost? Shelter. The sooner that distortion is corrected, the better they will be.

by frazz | 18th Sep 19, 10:37am 1568759872

Yes lbut unlike you we paid off our Student Loans and are now supporting our aging parents (including home) but still cannot afford a house for ourselves. Children..put off and now too late..so excuse my bitterness towards your post but many in my generation in the same boat.

by bw | 18th Sep 19, 10:46am 1568760419

I never had a student loan, true. I didn't know what I wanted to do after secondary school (failed final year!) so I went to work in an electroplating factory; placing brass toilet roll holders into a vat of boiling acid! Followed by a stint at British Tube Mills, stacking tent poles and then a bank. So I know about 'making the best of life'. And that's what it is for all of us - it wasn't meant to be easy, and it's what we all make of what we are and where we are, and the circumstance we exist in.
To blame 'boomers' and student loans etc is quite frankly a cop-out. I worked with what I have and what is available, and try to change what I can, so do you, that's just the way it is.

by frazz | 18th Sep 19, 10:46am 1568760412

Hah .we could argue for weeks - my message to you is spend spend spend - the country needs you now more than ever!

by bw | 18th Sep 19, 10:47am 1568760447

I am doing :)

by HellToupee | 18th Sep 19, 11:12am 1568761944

Difference is now, for a job electroplating toilet roll holders they will demand some engineering qualification, they have to pay for their education now while at the same time its worth less.

by youngdumbandbroke | 18th Sep 19, 1:43pm 1568770994

Why can't we have free education? My father paid nothing for his degree

by GGP | 18th Sep 19, 2:40pm 1568774420

What's free, though? It would have to be funded via an increase in income tax. The way the student loan system works, it basically already is that. It's an income tax that mostly applies to people who actually got their education, with a little help from the rest of the tax base, who pay the interest component.

by youngdumbandbroke | 18th Sep 19, 4:03pm 1568779435

Free as in all he had to pay for was food and part of his board?
I mean free to the student. Not having a $40k or more loan when you graduate

by GGP | 18th Sep 19, 4:18pm 1568780298

The money has to come from somewhere.

The current system is that you pay 12% of your income over $19,000 until the costs of your studies are covered (except the interest component, which is covered by other people's income tax).

The alternative system is that everyone (including people who didn't study) pay some smaller percentage of their income, forever, as part of income tax.

by youngdumbandbroke | 18th Sep 19, 4:55pm 1568782509

No doubt money has to come from somewhere.
Question - which system encourages people to pursue an education and also encourages retention of these educated people in NZ?

by GGP | 18th Sep 19, 5:10pm 1568783425

To be clear, I don't really support either system over the other - I just think we should be clear about the advantages and disadvantages of each.

Both systems encourage you to pursue an education. The other system might encourage it more, but there is something to be said for going too far, too. Higher education isn't for everyone. To some extent it is better for people to be forced to think at least a little bit about whether what they're studying will actually improve their ability to make money later.

In terms of encouraging retention of educated people, the current system is far superior. If you move out of New Zealand before paying off your student loan, that means you have to start paying interest on it. That encourages you to stay, to avoid having to pay interest. With the other system, you get everyone else in New Zealand funding your education for you, and then you can leave without consequence. Unless you had something else in mind for that?

by youngdumbandbroke | 19th Sep 19, 9:27am 1568842067

Or it encourages you to leave and never return? Just abandon the debt altogether??

by GGP | 19th Sep 19, 9:44am 1568843089

I don't think it "encourages" that. Never being able to come home again is a pretty steep price that I think merits serious consideration. I personally don't see that as worth saving like $5,000 a year for 6 years, but I guess not everyone agrees. Don't think I've seen any statistics on that, though.

by MisterB | 18th Sep 19, 5:22pm 1568784149

Would you like to see free Bachelor of Arts majoring in Dystopic Portraits?

by youngdumbandbroke | 19th Sep 19, 9:24am 1568841874

If it were my choice, Bachelor of Arts wouldnt exist

by Nzdan | 18th Sep 19, 5:07pm 1568783252

Makes perfect sense that a selfish generation would see no further need for taxpayer funded tertiary education once they've got their qualifications.

by GGP | 18th Sep 19, 5:10pm 1568783443

I'm 26.

by Nzdan | 18th Sep 19, 6:53pm 1568789631

Hey good for you! I'm so proud.

by GGP | 18th Sep 19, 7:06pm 1568790390

Proud of what? Being alive for 26 years? Thanks I guess.

by VeryInterested | 18th Sep 19, 9:44am 1568756661

You may be right there BW..... read something yesterday which was explaining that the very rich have stopped buying. Sales of luxury homes are significantly down, one of the main auction houses was down 10% and another down around 25%. ( referring to Sotherbys and Christies From memory).

by HeavyG | 18th Sep 19, 8:37am 1568752622

Real estate.

by Pragmatist | 18th Sep 19, 9:45am 1568756712

He was asking for low risk..

by CJ099 | 18th Sep 19, 8:32am 1568752373

Wow I was predicting that we could be seeing Home Loan rates of 2.99% by Christmas this year, at this rate it could be far sooner than that. My bet is HSBC will be the next one to drop their mortgage rates.

by HeavyG | 18th Sep 19, 8:46am 1568753165

A China vs Hong Kong rate war would be nice.

by MadMax | 18th Sep 19, 11:03am 1568761416

Wow, what a soothsayer, when did you predict that??
Was it recently?

by CJ099 | 18th Sep 19, 6:50pm 1568789430

It was earlier in the year when the Aussie banks realised they were in trouble due to a huge amount of mortgage lenders coming off their Interest Only rates and having to move on the Capital and Interest (Repayment mortgages), that could have resulted in massive amounts of people not being able to repay their mortgages. Even worse with a declining property market. But thankfully the banks here have acted quickly to lower their rates and easy that burden for Investors and home owners. I think the Bank of China is throwing it's hat in to the ring to attract more business on residential mortgages since the construction industry is faltering (Again due to high house prices). Just good business sense really.

by President of P… | 18th Sep 19, 8:54am 1568753697

specail retyail theese rfates riecent

President of Property

by Pragmatist | 18th Sep 19, 9:46am 1568756773

Call the ambulance, you might be having a stroke, seriously.

by JimboJones | 18th Sep 19, 11:43am 1568763782

Or stroking something at the thought of these low rates...

by Pragmatist | 18th Sep 19, 12:20pm 1568766039

eww, Can we not go there please.

by RickStrauss | 18th Sep 19, 1:34pm 1568770482

Where is the tumescent DGZ these days, anyway?

by CJ099 | 18th Sep 19, 7:35pm 1568792149

The property promoters have gone in to hibernation waiting for the next big Asia gold rush.

by Balanced Life | 18th Sep 19, 12:48pm 1568767692

Holy.. it's run by a Dynasty. They don't have to show you nothing. They just want you in debt to them.
Proverbs 22:7

by Smalltown | 18th Sep 19, 2:46pm 1568774777

From the same area.
"One who oppresses the poor to increase his wealth and one who gives gifts to the rich—both come to poverty."

Maybe Karma will visit finally on some of our recent knights, dames and governments who definitely did the former....

By the way who has heard the rumour that Brawnlee is to be knighted (when he finally stops wasting every ones tax payer dollars and retires) for his efforts in the rebuild?