The Co-operative Bank dives into the fixed home loan rate pool, going lower for five fixed terms and making a splash with 6 month and one year fixed rates

The Co-operative Bank dives into the fixed home loan rate pool, going lower for five fixed terms and making a splash with 6 month and one year fixed rates

The Co-operative Bank has launched new lower home loan rates.

The challenger bank now has a market-leading six month rate of 3.49%, down -20 bps from its previous level.

And it has retained the same rate for its one-year fixed offer, which now becomes the lowest one-year fixed rate of any non-Chinese bank. At this level it is -16 bps lower than the carded offers from the big four Aussie banks for that term, and -6 bps lower that the carded offer from Kiwibank. It is also lower than the other NZ-owned challenger banks.

At the same time it has trimmed its three, four and five year fixed rates.

Their three year rate is down -10 bps to 3.89%, matching ASB.

Their four and five year rates are down -20 bps to 3.99% and 4.09% respectively. These are both lower than the four big Aussie banks.

The Co-operative Bank relies heavily on depositor funding and less than others on wholesale funding. Mortgage rates this low present an interesting challenge for them, and they have trimmed many of these at the same time.

In the background, wholesale swap rates are at record lows and since the start of October have fallen another -10 bps across the curve. This is after being pretty stable in September.

The lowest rates in New Zealand at present are offered by Chinese banks who have a retail presence here.

Our table below presents carded rates. If you have received real rate offers lower than these, please note them in the Comment section below and what bank is involved. A note about related cash-backs or other incentives would be good too.

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 October 9, 2019 % % % % % % %
ANZ 4.29 3.65 3.99 3.49 3.99 4.85 4.95
ASB 4.29 3.65 3.75 3.49 3.89 4.19 4.29
4.79 3.65 4.55 3.49 3.99 4.35 4.45
Kiwibank 4.79 3.55   3.49 3.99 3.99 3.99
Westpac 4.99 3.65 4.79 3.49 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 3.49 3.49 3.59 3.59 3.89 3.99 4.09
China Construction Bank 4.70 3.19   3.19 3.19 4.95 4.95
ICBC 4.29 3.18 3.18 3.18 3.20 3.99 3.99
HSBC 4.65 3.35 3.35 3.35 3.35 3.35 3.35
HSBC 4.29 3.65 3.69 3.59 3.99 4.49 4.49
  4.35 3.69 3.69 3.59 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

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If this results in increased business for them , is there anything to stop them funding it from Wholesale funding?

I would also like to know. I've seen people on here claim both that the local banks are required to fund using deposits, and also the opposite that they are free to use wholesale funds. Seems like an important distinction at the moment.

"Low" interest rates is a relative term of course.
Is this low?

Denmark’s third-largest bank, announced on (Aug. 5) that it is offering 10-year mortgages at a rate of negative 0.5%. Another Danish bank also said that it will begin offering 20-year fixed-rate mortgages with 0% interest, as well as 30-year mortgages at 0.5%.

Not if rates keep falling - and the same might be said of here...and why have the Danes dropped their rates so far?

Negative rates, in general, are a sign that lenders are wary of where the markets are headed

They're "low" compared to past rates. If you think rates will drop further in the future, (most do) fix for short terms (1 year)

Yvil, any insight to 6 month terms available from banks currently?

As per usual.. im sure ppl will appreciate recent rate negotiation examples posted here.. anyone? Given the majors are around 3.5% advertised.. i would think sub 3.3% is achievable with 0.6-0.7 cash back? Cheers!

There must be a market for 10, 15 & 20 year fixed rate loans.

Where is the NZ Superfund on this? Kiwibank could steal the march on this, while the superfund creates a vertical supply chain for itself.

Long term forward thinking involved for this. That's probably why it hasn't happened. Most advisors are useless, and haven't done the research to work out what happens when investors start dominating the market, and the change in dynamics this brings to the market place.

Considering that the BNZ 7 year rate is 5.70% and 10-20 year rates would be higher, I'm not convinced that many people in NZ would go for those terms if they were offered.

As far as I'm aware, this sort of long term fixed rate is only really available in the US, and there only because the federal government subsidises the risk via fannie and freddie. Elsewhere people just aren't willing to pay the premium, and so the banks don't bother offering them.

You obviously don't read much. These long term rates are available throughout Europe also.

Its hardly appropriate to you use any of the big four banks rates as a measure of what they should be. This lot have been fooling the masses for an extended period. How else do you explain their 15% plus return on equity.

The bigger measure for long term rates are government bonds. If the wholesale market is prepared to pick these up at below 2%, surely a margin of 0.5% is sufficient for a bank to generate a sufficient profit to stay in business. BNZ rate of 5.7% for 7 years speaks of enormous profiteering.

Previous boom and bust cycles have been engineered by these banksters, for short term bonuses at the long term expense of the market and transfer of wealth. Now that we have a Reserve Bank Governor in Adrian Orr who understands the racket and is doing something about it, its time to get with the new game.

The new game is very little house appreciation, which will encourage people to stay longer in the residence. Now does borrowing longer make sense to you!!!

It would be helpful if you left the ad hominem out of it.

Could you be more specific about where in Europe these are available? I see the Denmark example above, but that's a very small market. Certainly in the UK there's the odd 10-year rate, but otherwise much the same as here regarding terms.

Much of what you say comes down to the questions above about deposit funding vs wholesale funding, and I freely admit I don't understand the subtleties there in NZ retail banking.

Here is 80 different mortgage > 5 year mortgage terms from the UK. 2.29% fixed for 10 years anyone?

In germany 0.58% for 10 years fixed, 1.32% for 20 years fixed

That 6 month rate is a real outlier compared to ALL banks; the big 4, challengers and Chinese. Has anyone heard of the Big 4 offering comparable 6 month rates in ball park of 3.49? With consensus on dwindling inflation and global slowdown continuing fixing for 6 months, this rate would seem like a great position to take, would it not?!

yes, isn't it odd how the big 4 6mth rates are so much higher than their 12mth rate

The big four are preparing themselves for the extra capital requirements, none to soon to be imposed on them by our Reserve Bank Governor Adrian Orr; who has recognised their profits are excessive. Brash, Whitehead, Wheeler & Bollard were asleep at the wheel, or more interested in self preservation; I suspect the latter. Their independence is an outright lie.

These big four continue to abuse their existing customers, by not coming to the market. I'd be off in a flash, if they didn't at least match the lowest rate. Probably a way of weeding out the marginal lending, but still an abuse of power and profit.

The 6 month is not a published special rate for most banks , but you can negotiate , I used to get within .1 to .25 of the 1 year special .
I think they want anyone thinking to hold short term to go on the higher floating rates.

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