Kiwibank is cutting 1-year fixed mortgage rate 'special' by -36 bps from Monday to 3.09%, and cutting savings rates by between -10 and -50 bps

Kiwibank is cutting 1-year fixed mortgage rate 'special' by -36 bps from Monday to 3.09%, and cutting savings rates by between -10 and -50 bps

Kiwibank is following ANZ with a sharp cut to its one year 'special' fixed rate, taking it down to 3.09%.

But that is not quite as low as yesterday's 3.05% rate announced by ANZ.

Both follow the recent announcement of sub-3% fixed home loan rates by Heartland Bank. But those earlier levels were labeled by Heartland as "very much a trial". It has been a trial they claim has been well received.

Kiwibank's announcement involves a -36 bps reduction and that reduction also applies to their 'standard' one year rate which now becomes 3.84%.

Banks are facing sharply reduced loan demand as the country locks down and businesses stop borrowing to fund new investment. Borrowing for working capital support is a prospect banks won't be very keen on, and why public officials have been imploring them to keep doing it. The banks' fundamental problem is that it can look like irresponsible lending very easily if borrowers can't survive a sharp downturn.

No other mortgage rates are changed in today's announcement, but term deposit rates are being cut.


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The term deposit rate cuts at Kiwibank involve -10 bps for all terms of one year and more, and up to -25 bps reduced for some terms less than one year. One special low tier level TD rate offer is down by -50 bps.

The hard truth is, lending demand is expected to wither under the pressures of the virus lockdowns so it is 'easier' to cut TD rates in this environment.

Wholesale rates have suddenly turned very unstable. After falling sharply, as Governments have rolled out massive support packages, bond investors are turned bearish wondering how financially prudent that is and suddenly demanding much higher risk premiums. Sadly, without loan demand, these higher risk premiums are unlikely to flow through to retail savers.

Savers are paying for these low mortgage rates.

[* Heartland Bank has a trial program offering even lower rates.]

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 March 19, 2020 % % % % % % %
               
ANZ 3.65 3.05 3.49 3.35 3.99 4.75 4.85
ASB 3.89 3.45 3.75 3.39 3.69 3.79 3.89
4.79 3.49 3.39 3.55 3.69 3.79 3.89
Kiwibank 4.29 3.09   3.39 3.65 3.99 4.09
Westpac 4.79 3.39 4.25 3.55 3.69 3.79 3.89
               
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
Heartland Bank   2.89   2.97 3.39    
ICBC 4.29 3.18 3.18 3.18 3.20 3.99 3.99
HSBC 4.19 3.54 3.54 3.20 3.69 3.79 3.89
HSBC 4.29 3.39 3.69 3.55 3.89 4.19 4.29
  3.89 3.39 3.55 3.55 3.89 4.45 4.55
Price Match Promise   3.05 3.39 3.35 3.69 3.79 3.89

In addition to the above table, BNZ has a unique fixed seven year rate of 5.20%.

Fixed mortgage rates

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29 Comments

Good to see another bank actually passing on the cut.

I wonder if the other banks (ASB/BNZ/Westpac) will try to pocket the gain for themselves or whether they'll follow suit and lower their rates too.

They have no choice but to follow ANZ & KB (not necessarily matching exactly but they will drop their rates, they can't "pocket the gain for themselves")

I'll believe it once they cut.

I'm happy to bet a beer with you that they will?

I'm happy to trust your nous on this particular topic.

Might be a very good time for the government to injected billions of dollars into Kiwibank, for them to lend at cost to locals and locally owned businesses; rather than let these overseas owned parasite banksters export even more profits offshore to their mother ships.

These motherships care not for NZ inc, but maximising profit for those who have more than enough already. If they had any charity, the executive and board would have embraced salary deductions already. As one of Paul McCartneys songs goes 'too rich for charity', if they only realised 'all they need is a pint a day'.

So who do you bank with? a bank with a mothership or an NZ bank?

Surely one of the main banks won't be able to resist trumping everyone else with a 2.99% rate

Only a matter of time.

It will go lower than that even.

It' won't matter what the mortgage rate is really, if:
1) Banks aren't lending ( they'll curtail it if it gets REALLY bad) and
(2) "Property is about to go “no-bid” - no one wants to buy.
It's coming....
https://www.macrobusiness.com.au/2020/03/property-is-about-to-go-no-bid/

I disagree, for a drop of say 0.5% a business saves $5'000 for every 1 million borrowed, money that could go towards paying employees for example

If....it's still in business. That's going to be a big unknown. Who is going to make it through?
A lot of SME's and even bigger, are going to The Wall over the next short time, and there won't be 'savings' on borrowings, all there'll be is debt to be allocated to the lender owning the default. ( the Bank(s), invariably. Which is why they're going to be gun-shy on any new lending)
It's going to be bad, in case you haven't already guessed...

I see your (very dark) point

Yep it's a train wreck for tourism, hospitality trade. Unfortunately mental health, suicide s will far outweigh any deaths from this virus, something the government has to consider

Yep it's a train wreck for tourism, hospitality trade. Unfortunately mental health, suicide s will far outweigh any deaths from this virus, something the government has to consider

That is a fair article if the NZ market was like it is in Australia.
Reality is that the NZ market is not like Australia’s in most parts of Nz where we have positive geared property investors and interest rates are low.
Investors won’t be selling their properties unless they are in negative territory or are affected by other business interests that are struggling.
Personally think that the market won’t drop in any areas at all and it certainly will rise in certain places as people finally realise that housing investment is the safest.
Equities have always been a risk and for financial advisors to continually spruik equities when they are overpriced is bad news

That's what makes a market - different opinions.
You are stuck with your property for either, Market Reasons ( liquidity) our Emotional Reasons ("Property never goes down') I suspect the latter, but time will tell, and I don't reckon there's much of that left. For instance:

"Macquarie Bank shares ( one of the smartest, aggressive, risk-taking, successful banks on the planet) from $151 down to $79.5 in a month"
No one expected that, least of all those bankers who have shares in lock-up; have borrowed against them and, too, are 'locked in' to their debt.

"That's' not property! And it's Aussie as well!" True enough. But that....is coming to NZ and its property market. Just my opinion, of course...

We aren’t talking large screen tvs here. People will still need a place to live.
Let’s say for example that Mr and Mrs Smith have a three bedroom house in the suburbs that they bought 6 years ago with a 20% deposit. Mr Smith stays at home looking after their children and Mrs Smith has a good job at Air NZ as a pilot.
Catastrophe strikes and the world ends in pandemic related chaos.
Mrs Smith is made redundant. Mr Smith gets a part time job stacking toilet paper on the shelves at a supermarket.
Do Mr and Mrs Smith madly rush to sell their house at a discount, lose their equity, and then rent a new house for more than their mortgage payments used to be? Or do they talk to their bank, wear the break fees to get a new interest rate, and ride things out assuming that life will get better over the next 24 years their mortgage has to run.
My money is on the latter, but you have disagreed with me before.

They go to their bank, who looks at what their ( the banks) share of equity is, and if it's positive, they 'suggest' Mr and Mrs Smith 'sell while they can' and repay the bank.
If the Smiths' are 'underwater' the bank will keep them afloat, whilst keeping an eye out for another customer who wants to take on the debt ( buy "the bank's' property).
Banks....aren't welfare agencies - they are dispassionate businesses.

the pessimism is strong in you. You must be loving all the bad news lately.

Maybe re-read my example first. You seemed to have missed everything i wrote except the generic name.

Second, which bank do you think will be the first to defend their life crushing money grabbing with the “we aren’t welfare agencies, we’re dispassionate businesses” line. I for one wouldnt want to work in their PR department

Banks are fair weather friends

Yes agreed BW, And on top of that there's the off loading of short term rental properties like Airbnb's that are starting to flood the rental market. It's the Reluctant Landlords that will push both rental prices and house prices down.

and what about the nonsense in the Residential Tenancies Bill - tenants will be able to pay rent late 3 x in 90 days with impunity whilst the landlord still has to pay the rates, mortgage, insurance on time.

Anyone else watching how quickly the NZD is tanking today? 0.55 USD and sinking...

Yeah it's not just the NZD it's everywhere. Even the Pound has tanked to its lowest level in over 30 year.
BBC Coronavirus: Pound plunges to its lowest level in over 30 years. https://www.bbc.com/news/business-51921922

Unprecedented demand for USD is interesting as most derivatives are priced in that currency. Wonder if we will have a global margin call that will break the banking system as counter-party risk that the banks manage implodes.

Derivative portfolios are usually large in total value but close to neutral when netted against each other. They should only become a serious concern if the counterparty risk they create gets set off by some big banks rolling over.

ANZ picking house price drops of between 3.5% and 10% this year.

https://www.stuff.co.nz/life-style/homed/120414372/more-economists-warn-...