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BNZ gets back in the ring with a 'special' rate card all below three percent, including all rates for three, four and five years fixed

BNZ gets back in the ring with a 'special' rate card all below three percent, including all rates for three, four and five years fixed

Not to be outdone, BNZ has released a revised rate card for its Classic home loan 'specials' that feature all rates between one and five years under 3%.

This comes just one week after their last cuts.

This latest set are effective Monday, May 25, 2020.

BNZ's one year fixed 'special' is 2.79%, a drop of -26 bps.

All other Classic term rates out to five years are now 2.99% and these involve cuts up to -60 bps.

This move comes after all their main rivals have moved lower. The most aggressive drop so far has come from ASB with their two year 'special' at 2.69%, so these BNZ rates don't threaten that.

But BNZ now has market leading positions for three, four and five years fixed. In fact BNZ is the only bank offering rates below 3% for these terms.

The mortgage pricing landscape is changing very quickly now, with multiple, market leading announcements daily.

Interestingly, the main bank most off the pace now is state-owned Kiwibank - and it is from them the next move is most likely to come.

As we have noted elsewhere, these sharp home loan rate decreases are going to mean more pressure on savers. Banks are adept at not announcing TD rate cuts at the same time, doing those separately but often so the decreases each sound small. But they are compounding to very low offer rates now for term deposit investors.

One useful way to make sense of these new lower rates is to use our full-function mortgage calculators

And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options.

Here is the updated snapshot of the advertised lowest fixed-term rates on offer from the key retail banks at this time.

Fixed, below 80% LVR 6 mths  1 yr  18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
as at May 22, 2020 % % % % % % %
ANZ 3.65 2.79 3.05 2.95 3.35 4.45 4.55
ASB 3.55 2.85 3.05 2.69 3.35 3.45 3.55
4.79 2.79 2.99 2.99 2.99 2.99 2.99
Kiwibank 4.29 2.99   3.39 3.65 3.99 4.09
Westpac 4.79 2.79 4.25 2.79 3.39 3.49 3.59
Bank of China 3.89 2.79 2.89 2.89 3.19 3.79 3.89
China Construction Bank 4.70 2.80   2.85 3.19 3.30 3.45
Co-operative Bank 3.09 3.09 3.35 3.35 3.69 3.79 3.89
Heartland Bank   2.89   2.97 3.39    
HSBC 3.49 2.80 2.85 2.89 3.50 3.60 3.70
ICBC 4.29 3.18 3.18 3.18 3.20 3.99 3.99
SBS Bank 3.89 2.99 3.05 3.05 3.69 3.79 3.89
  3.39 2.79 2.99 2.99 3.39 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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Advice please: Currently at 3.99% until December. Worth considering breaking, or wait? $260k mortgage

It's unlikely that you would benefit from a break fee. Note that the rates as they stand are likely to drop substantially by December, and in the long run you may benefit more from the lower rate in December rather than today's rates.

However there is nothing to stop you from calling the bank and asking if they can give you a better rate.

Pretty similar situation, mine comes up in Sept. Will wait for then. Seems like they are still trending downwards. The 5yr rate is a good indication I think that the 1 and 2 yr rates will go down further. 5yr tends to be around 25% above those. I think sub 2.5% is sweet spot in a few months.

Probably not worth the break fee for now while rates are dropping so fast but see what this calculator says.

I am in the same boat but I am expecting rates to drop fast enough that I am better to wait for my renewal in December and get <2.5%

I'm taking a similar approach. I have 2/3 at 3.99% and 1/3 at 3.05%. I'm expecting competitive interest rates for next year.

My guess it next to nothing if you haven't changed your repayments because many banks allow you to repay a certain % early without penalty. If you don't use that to make additional repayments they take that into account when calculating the cost associated with terminating the existing fixed rate contract.

Call them and ask what the cost to terminate that fixed rate contract would be.

Depends on the bank your with and how much they quoted you to break it?

Great news for FHBs! Apart from that thing where house prices are about to fall off a cliff, and you're reasonably likely to lose your job anyway. Yay.

What a total disaster.

The globe is on this huge, reckless race to the bottom. Crushed living standards, stagnation under debt zombie economies, and toxic risk across every asset class (and no yield otherwise).

Advise please.
Myself M45 Wife F47 & one son at home M18. Mortgage free no other debt and 70k deposited with KiwiBank.
Apprehensive seeing more and more chance for an OBR and wondering what people suggest we should do.
Split the money between 3 banks maybe?
Do not want to buy shares at this stage as believe they are still in for a correction and am totally against the rental ponzi :)
Thanks for your advise.

What does OBR stand for and what is it designed to do?
Answer - OPEN bank resolution,
And it's designed to keep any struggling bank 'alive' until it gets wrapped up into a larger one.
So what do you see as the problem?

The fact they open your account and have a bit of a pilfer?

In what way?
The OCR mechanism provides UNLIMITED liquidity to registered banks on an overnight basis - Unlimited.
So what do we think is going to happen to not allow the banks to fund themselves if push comes to shove?

The OBR is an explicit bail-in of depositors of the bank being used to make up the losses as needed. There's a threshold over which deposits will be raided at some rate. The threshold and haircut rate will depend on the circumstances at the time.

I imagine its likely the threshold would be something like $100k, but it could be less or much more.

Love OBR, something taxpayers won't be on the hook for. Congratulations to all the savers that will be bond holders.

When it comes it'll probably be one of the smaller banks first.

I doubt savers will become reluctant Bondholders. Shareholders will be toast, of course, and so they should be if any business fails ( and even that's a 'maybe'!).
But if savers get touched at all, it's the end of banking and the banking system as we know it.
And that means everything is worthless, no matter what it is. ( No banking system? = no way of valuing anything except by barter)
So, yes, banks may struggle and be rationalised. But savers? They HAVE to be protected to protect the very system itself. And that happens by the letterhead of the bank that issues their monthly saving statement changing.

Cash and PMs in a safe deposit box. Some (~$10k?) crypto if you don't mind a bit of a gamble. And kiwi bonds.

a)Buy a Stabicraft or Ford Ranger while your $70k still has some purchasing power, or
b) Put it in Kiwibank.
If Kiwibank go under and the Govt don't support them, things will be so bad you'll probably be murdered and eaten anyway :)

Be patient. There will be window when cash will rule .. before inflation ramps up. Buy some gold stocks on the dips.

If you are worried about a Cyprus style OBR event then splitting between multiple banks would reduce the risk of loss.

Having an amount of cash or bullion at hand can be useful in the event of an unusual financial event.

Wow, you have enough to buy some physical gold and silver.
Gold was under 65k for 1kg this time last year, it's now 91k for 1kg. Slow and surely. All the best.

95k today.

They can drop rates to zilch, but the public have no job security, are heavily in debt, so will not spend.
So print for Africa, but no matter what, the cash stays under the mattress.
Liquidity has dried up.
Deflation is here.
Until it's not.

Whenever a bank prices a 5-year rate, they have a decent bit of fat on the rate as insurance.

If it's 5 years at 2.99%, it's it's a pretty clear signal of where they see rates going long term.