Bank of New Zealand launches a market leading 18 month fixed mortgage rate offer at just 3.05%, the lowest rate for this term by any bank. They also change term deposit rates

Bank of New Zealand launches a market leading 18 month fixed mortgage rate offer at just 3.05%, the lowest rate for this term by any bank. They also change term deposit rates

The next cab off the rank is BNZ who have cut fixed home loan rates.

They follow ANZ and Kiwibank (and actually, Heartland Bank launched very low rates even earlier).

BNZ has taken -40 bps off its one year fixed rate, with the Classic 'special' now at 3.09%. That matches Kiwibank, but is not as low as ANZ's 3.05% for one year (and none are as low as Heartland's 2.89%).

BNZ has also taken -34 bps off its already low 18 month rate, with the new rate now 3.05%. That matches ANZ's one year rate, but is the lowest 18 month rate of any bank in New Zealand.

They have also cut their two year fixed rate Classic 'special', dropping it by -20 bps to 3.35% and that also matches ANZ for this term. (Heartland has a 2.97% two year rate and China Construction Bank has 3.15%.)

The wholesale money markets in the background are in covid-19 turmoil, so reference to current swap rates is a little fraught - banks have their own cost of capital and this will drive their rate setting decisions.

The biggest single cost of capital is their deposit base and term deposits are a good part of that.

So we are seeing a matching reduction in TD rates at the same time.


The world is changing fast and we now need your support more than ever. Quality journalism is expensive and in these very troubled times our ad revenues are becoming very uncertain. We provide our coverage free to readers, and if you value that, we ask that you Become a Supporter. To do that, either click on the Red button below, or on the Black button at the top of this page. The level of your support is up to you. Thank you. (If you are already a Supporter, you're a hero.)


BNZ has trimmed these rates as well, especially rates below one year. We will have more detail on this later, but these rates are down -5 to -10 bps today.

But BNZ has also surprised - it has raised its 18 month TD rate by +25 bps to 2.65% which is an especially attractive level in the current market. For example, the equivalent rate from ANZ is 2.35%, from ASB it is 2.40%, (Kiwibank doesn't offer an 18 month rate but their one year rate is 2.50% and their two year rate is 2.40%.) Westpac is the marker that sets up the BNZ change - they still offer 2.70% for 18 months and we were expecting that to end soon.

Back on BNZ's mortgage rate cuts, matching reductions have been made to their Standard 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 20, 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 3.09 3.05 3.35 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 3.05 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

Select chart tabs »

The '6 months %' chart will be drawn here.
Loading...
fixed rate 
floating rate
unweighted
The '1 year %' chart will be drawn here.
Loading...
fixed rate 
floating rate
unweighted
The '2 years %' chart will be drawn here.
Loading...
fixed rate 
floating rate
unweighted
The '3 years %' chart will be drawn here.
Loading...
fixed rate 
floating rate
unweighted
The '4 years %' chart will be drawn here.
Loading...
fixed rate 
floating rate
unweighted
The '5 years %' chart will be drawn here.
Loading...
fixed rate 
floating rate
unweighted

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

17 Comments

Comment Filter

Highlight new comments in the last hr(s).

How good!!!!!!

What is? The fact the country is such an economic disaster zone that we have to cut interest rates to stave off mass bankruptcies? (Which, by the way, are coming regardless)

He is probably happy that his mortgage servicing costs have/will drop. BW let NB enjoy his moment thanks without you feeling the need to chime in as the Voice of Doom.

See Plutocracy, other banks are following ANZ, they cannot stay where they are and "keep the profits to themselves" as you questioned. Westpac and ASB will follow

We'll see, two more to go in the next week... As a courtesy at that point I'll even refrain from bagging you if you want to brag about your prediction being right! ;-)

A bit of me wonders if any of this really matters now...

Remind me of that old office cartoon - mice about to be swallowed by eagle, it's last great act of defiance is ... one finger salute ;-)

In this up coming storms of lay off, business close the door, belly up - Why OZ/NZ Banks talk much about passing the OCR straight into 'Home Loan' rather than what matter the most? (in logical thinking that is).. business loan, employment focus, struggling business that employed heaps on staff etc... it seems their mantra is still about Wealth creation, rather than attending the obvious.. Health, productions or others? anyone cares?

Building houses and landlord’ism is business in NZ (half sarc, half not).

Agreed, kind of disappoint to hear about it, just a slight personal wish for the future well being of this country - nice to hear in the midst of current emergency news isn't it? - when the banks said, the relief rate is directed for the SME business, farmers, fresh produce, employment assistance for re-deployment activities/temporary productive assistance etc - but, yea wish/dream are free here in NZ.

Just a comment because I saw BNZ in tittle. Did hear Tony Alexander on ZB radio talking about Bernard Hickey yesterday, and gave him stick about what Bernard had said about housing market. Now I seem to remember that Tony predicted years ago that we would end up with a 2 dollar 50 milk solid payout. That season ended with a 5 bucks payout. Just wanted to refresh Tony's memory.

Tony wants landlords to reduce the rental to recognise the short term capital gains these banksters created.

Tell you what Tony, I'll reduce by rents if the banks absorb my loss of reduced income.

What about the banks reducing their costs and profit. Havent heard anything from the banks chief executives or board member they'll be reducing their (grossly excessive) take home pay.

I've got news for you Hisco, and its all bad. The NZ property you bought with the assistance of the master of illusion (Jonkey) has just lost $4 million, but how you have a good excuse for staying in self isolation.

Tony wants landlords to reduce the rental to recognise the short term capital gains these banksters created.

Tell you w
What about the banks reducing their costs and profitrunning

Government needs roll out some big think big projects in areas of NZ hit hard. Get them fast tracked so companies can start training a workforce. The blue print for this was done in kaikora earthquakes, thousands employed, put $ back into community and have infrastructure to show for it for future generations. Better than just paying benefits, then once finished hopefully world would of re adjusted. Get it fast tracked and offer some hope for those who's livelyhoods are in ruins

Waste of time if the banks tighten up on lending and I have it first hand thats already happening. Rates could go to Zero but if the bank will not lend to you or worse still, starts calling in your loan then what are you going to do ? Plenty of people out there are now wishing they had paid down that debt faster and those higher over leveraged property speculators will now be shitting their pants. This is going to hit "Level 5" for many people.

Lower rates are not so much about new loans, they are mostly about existing loans, by lowering the interest rates the servicing of the loans becomes cheaper, therefore the borrower is less likely to default on the home loan or if the loan (secured against residential property) is used for business purposes it helps the employer pay his employees or other expenses

Ashley RE/property Church gospel, has already gave a clear indication days before this announcement. All these govt. loan borrowing, lowering the interest by Banks following the RBNZ moves, are really the initial answer to give a resting mindset to those property owner, their loan re-payment has been relaxed, with mortgage holiday coming soon, the govt/tax payers grant in the name of unemployment but it's actually for individual loan servicing home mortgage to the Banks. This all to anticipate the OBR activation, which shall carry further stability & assurances for the home loan borrower. So as Bindi said; click that online auction button now.. now.. NOW!

Your access to our unique content is free - always has been. But ad revenues are diving so we need your direct support.

Become a supporter

Thanks, I'm already a supporter.