More banks make fixed home loan rate cuts and match them with steep term deposit rate cuts and the overall level of interest rates sink lower

Fixed mortgage rates below 3% are becoming a very real possibility.

At the moment, only Heartland Bank (who has an open trial program launched), and Simplicity (who only offer it to a limited set of first-home buyer members) have gone below 3%.

But you can sense it can't be too far away.

Two more banks have eased fixed rates lower in the past 24 hours.

First it was the Co-operative Bank. This banking minnow is in a very tough spot being solely dependent on its customer deposit base to fund its lending book.

They cut fixed rates by between -10 bps and -24 bps across the whole fixed rate card. They are the only bank recently to do that.

And they have the market leading six month fixed rate, which could well be attractive to borrowers who need to roll over now and expect rates to be much lower soon after they do that.

And now ASB has said it will match ANZ's 3.05% one year fixed rate, taking its 'special' for that term down to 3.05%. BNZ has that same low level at the longer 18 month fixed term. Kiwibank and Westpac have their one year fixed rate at 3.09%.

Westpac's reductions earlier this week were notable in that, unlike their main rivals, they didn't offer the same relief to borrowers on standard rates - and that means first home buyers especially. For example, Westpac's differential between standard and 'special' one year rates is an imposing and tough +106 bps, whereas ANZ and ASB has kept it at just +50 bps. BNZ has that differential at +66 bps, and Kiwibank has it at +75 bps.

Recent announcement by the Government that they have banker agreement to provide mortgage payment holidays for borrowers who become distressed over the loss of income/employment will only mean a suspension of the need to make payments for the agreed period. It won't extinguish any debt and it won't stop mortgage interest accruing. Details on the scheme have yet to be released, but are expected soon.

Meanwhile, while ASB and the Co-operative Bank's mortgage rate reductions were announced, the two banks also announced steep cuts to their term deposit offers as well. We will have separate detail of these changes soon.

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Wholesale swap rates have also been moving recently, but this market is somewhat chaotic at present, chopping from big falls to some sizeable rises. Overall the trend is down. But liquidity in these markets is very strained and banks abilities to actually source significant new wholesale funding is in question. Investors sense heightened risk and low rate deals will be hard to bank treasurers to stitch together.

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 25, 2020	%	%	%	%	%	%	%
ANZ	3.65	3.05	3.49	3.35	3.99	4.75	4.85
	3.89	3.05	3.75	3.39	3.69	3.79	3.89
	4.79	3.09	3.05	3.35	3.69	3.79	3.89
	4.29	3.09		3.39	3.65	3.99	4.09
	4.79	3.09	4.25	3.39	3.69	3.79	3.89
Bank of China	5.15	5.25		5.35	5.50	5.70	5.99
Co-operative Bank	3.25	3.25	3.35	3.45	3.69	3.89	3.99
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
	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%.