ANZ raises some key home loan rates as wholesale rates dip and deposit rates stay unchanged - because the re-ignited housing market takes pressure off banks to keep rates low

ANZ raises some key home loan rates as wholesale rates dip and deposit rates stay unchanged - because the re-ignited housing market takes pressure off banks to keep rates low

ANZ is the latest to raise home loan rates.

They have raised both their eighteen month fixed and two year fixed rate by +10 bps.

And they have set their one year fixed rate at 3.45%. Although their website said this rate was 3.55%, the bank confirmed to interest.co.nz that they would apply a 3.39% rate to anyone who asked. So effectively this is a +6 bps increase.

These three increases continue a trend by other banks in December 2019 of raising home loan rates by small increments. ANZ's increases are the first of 2020.

The new ANZ two year rate is in fact the highest carded rate by a main bank, in fact by nearly any other bank.

ANZ's one year and eighteen month rates are still competitive, sitting in the middle of the pack. Among the main banks, ASB and Westpac have lower one year rates (as does TSB based on its "price match promise" policy). Some smaller locally owned challenger banks also have lower offers.

ANZ's eighteen month rate is also middle-pack with BNZ (and TSB) with lower offers for this term.

Wholesale swap rates had started rising in early December which resulted in some banks raising some fixed home loan rates.

But in the last week of January, these rates started falling, and quite quickly, and are now in fact lower than where they started in mid November 2019.

And all banks are predominately funded by customer deposits. Those rates didn't really move over this period either up or down (with a couple of minor exceptions mainly related the Chinese New Year offers), so they too are not the basis of ANZ's hike today.

ANZ is raising rates because they can. And the space is there because housing market demand is picking up so borrowers are less focused on 10 bps of interest cost than in closing a deal in a rising market.

ANZ has not announced any term deposit rate changes at the same time.

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 February 4, 2020 % % % % % % %
               
ANZ 3.65 3.45* 3.49 3.65 3.99 4.75 4.85
ASB 3.89 3.39 3.75 3.55 3.89 4.19 4.29
4.79 3.49 3.39 3.55 3.89 4.09 4.19
Kiwibank 4.29 3.45   3.55 3.89 3.99 4.09
Westpac 4.79 3.39 4.25 3.55 3.99 4.35 4.45
               
Bank of China 5.15 5.25   5.35 5.50 5.70 5.99
Co-operative Bank 3.49 3.49 3.59 3.59 3.89 3.99 4.09
China Construction Bank 4.70 3.15   3.15 3.19 3.30 3.45
ICBC 4.29 3.18 3.18 3.18 3.20 3.99 3.99
HSBC 4.19 3.54 3.54 3.54 3.69 3.79 3.89
HSBC 4.29 3.39 3.69 3.55 3.89 4.49 4.49
  4.35 3.39 3.55 3.55 3.89 4.45 4.55
Price Match Promise   3.65   3.39     4.09 4.19

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.

* The rate on ANZ's website was 3.55% but ANZ confimed they will apply 3.39% if requested. Now this rate has changed to 3.45%. From the website basis, this is a reduction. But from the practical prior rate it is an increase.

Fixed mortgage rates

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6 Comments

ANZ is raising rates because they can. And the space is there because housing market demand is picking up so borrowers are less focused on 10 bps of interest cost than in closing a deal in a rising market.
Exactly:

Thus it can be plainly seen today that the most important macroeconomic variable cannot be the price of money. Instead, it is its quantity. Is the quantity of money rationed by the demand or supply side? Asked differently, what is larger – the demand for money or its supply? Since money – and this includes bank money – is so useful, there is always some demand for it by someone. As a result, the short side is always the supply of money and credit. Banks ration credit even at the best of times in order to ensure that borrowers with sensible investment projects stay among the loan applicants – if rates are raised to equilibrate demand and supply, the resulting interest rate would be so high that only speculative projects would remain and banks’ loan portfolios would be too risky.

The banks thus occupy a pivotal role in the economy as they undertake the task of creating and allocating the new purchasing power that is added to the money supply and they decide what projects will get this newly created funding, and what projects will have to be abandoned due to a ‘lack of money’. Link-section II -3.

This statement "Banks ration credit even at the best of times in order to ensure that borrowers with sensible investment projects stay among the loan applicants – if rates are raised to equilibrate demand and supply, the resulting interest rate would be so high that only speculative projects would remain and banks’ loan portfolios would be too risky." is confusing. "Rationing" credit would mean capping how much is available and should result in an increase in demand and therefore an increase in rates. Instead it reads like it is saying that banks are selective in who they loan to, to keep the 'sensible investment projects' going.???

by Nzdan | 14th Nov 19, 7:05am
3
up
Banks probably want interest rates to rise after a prolonged period of increasing loan book size. A bait and switch of sorts. Get everyone juiced up on low lending rates and then tighten up the vice on the balls.

https://www.interest.co.nz/bonds/102567/markets-price-lending-rate-hikes...

A tweak up to get people locked in before an emergency cut by RBNZ because of Coronavirus and the effect that reducing visitor numbers will have on GDP?

Any outside news will bare minimum impact for NZ economy (YR, specially the one affecting China-they're too big to fail mentality), even RBNZ just put it on noted list to watch, we don't even heard of such parameter around Nov. last year, until it's been discovered on the 31Dec same year. But then so does any natural disasters, such as big floods, e/quakes, cyclones. Does it worth to do preparation? '..No Force can stop NZ upwards property prices.. ' for sure. Similar to the tone by Xi Jinping around 3 months ago about China progress, then..this tiny freakin' bugs came along. Interesting as to how China high ranking official gave stern warning to NZ after the decision to temporarily close the border, the step born out of confidence due to the size of them that can cause damage/repercussion to NZ-China relation. That China mentality serve a warning sign to us: If we're baby inside the mommy's womb, kicking hard, then watch out mommy can decided to drink heaps of alcohol, to curb our kick.. before you know it? - we're born into this world as FASD babies. Deal with China, means followed their rule, deviate a bit? you'll be at the end of their wrath. China is always for Chinese & Chinese for China - It's a novel dream to think that China is for the world but for sure? the world is for China needs. China gambling rule is to win, and they gamble with the looser.. always, (wherever they go? they always divided the looser in two; the upper echelon temporary winner/usually local politicians/authority that have been bought to give clear mandate to govern their own real looser's constituents public).

FYI, today I still got 3.39% from ANZ fixed for 1 year