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Bank of China launches a new all-time low home loan rate just as wholesale markets try and turn up after reaching their own record lows

Bank of China launches a new all-time low home loan rate just as wholesale markets try and turn up after reaching their own record lows

A new low has been established for fixed home loan rates.

Bank of China has launched a 2.55% one year fixed offer.

In addition, they have cut 'special' rates across the board.

Their new 18 month and two year fixed rates now match HSBC at 2.65% as the market lows for each of these terms.

And their three to five year rates are new all-time market lows for these respective fixed terms.

While these rates are available for all qualified borrowers who meet the 20% equity threshold, the main banks may or may not match rates this low. But borrowers do have the option to choose them at Bank of China.

This new offer set comes at an interesting time. Wholesale swap rates have been rising in the past two or so weeks.

The one year swap rate reached its all-time record low of 0.18% on May 14, but has since risen to 0.26%.

The two year swap rate reached its low of 0.11% on May 19, but has since risen to 0.23%.

The three year swap rate reached to low of 0.10% on May 19, but has since risen to 0.30%.

Although not directly related to the home loan market, banks have seen the ten year swap rate at its record low of 0.59 on May 19 rise to 0.82% today.

And the market expectation is that these wholesale rises will continue. That will crimp what banks feel they can reduce or match in mortgage negotiations

One useful way to make sense of these new lower home loan 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 lowest advertised fixed-term mortgage 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 June 5, 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
4.29 2.79 2.79 2.69 2.99 2.99 2.99
Kiwibank 4.29 2.65   2.79 3.25 3.45 3.55
Westpac 4.79 2.79 4.25 2.69 2.79 2.99 2.99
               
Bank of China 3.45 2.55 2.65 2.65 2.75 2.85 2.95
China Construction Bank 4.70 2.80   2.85 3.19 3.30 3.45
Co-operative Bank 2.79 2.79 2.79 2.79 3.39 3.49 3.59
Heartland Bank   2.89   2.97 3.39    
HSBC 2.95 2.60 2.65 2.65 2.80 2.89 2.99
ICBC 3.50 2.79 2.95 2.95 3.69 3.99 3.99
SBS Bank 3.89 2.99 3.05 3.05 3.69 3.79 3.89
 [incl Price Match Promise] 3.39 2.79 2.79 2.69 2.79 2.99 2.99

In addition to the above table, BNZ has a unique fixed seven year rate of 5.20%, which is unchanged in this update.

Fixed mortgage rates

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17 Comments

I did a refix at higher rate recently.

When approaching the bank regarding this awesome new low rate, it refixed me at this rate for free.

Oh yeah..

Which bank was that? Normally any NZ/Ozzy bank here automatically dismisses any Chinese competitive bank rates, regarding them as too high risk since Chinese banks seem to be reliant on very dodgy practices like shadow banking.

That's normal practice X...

"Welcome to my web"

Actually this seems like a smaller gap between the major and minor banks than there has often been. Hard to see it being worth dealing with BoC over one of the local banks for 4-10bp.

They're doing us a service - putting pressure on the main banks to go down. In the meantime I'm still floating. Let's see what Tuesday holds shall we?

Only if they can realistically take market share

Agree. The big banks mostly seem content to ignore them. Though presumably if the gap gets big enough, people will start to think that the hassle is worthwhile.

To be fair, the bigger banks take deposits, so have those customers to consider. They also run branches and provide fuller service. That does tend to cost more. It's not much of a price differential really.

The Government should just do direct helicopter money to homeowners for any loss in equity. Why should they lose wealth just because of a pandemic?

please tell me you're being sarcastic.

Paper equity <> Wealth, especially if asset prices are out of step with value, incomes etc.

Why should taxpayers bail out homeowners just because they had FOMO and spent too much on a house?

Yes, I am a homeowner, and no, I dont want my tax dollars going there.

DO NOT FIX YET ............. this is not the bottom of the cycle

Boatman, do you think the 5 year bottom will be lower too?

We are now into 'keep your eyes open' territory.
It's time for those who have the opportunity (not by breaking existing mortgages and fixing) to have a serious look at rates 'down here'.
The risk factor of 'more to go' vs 'that was the bottom!" is as high as it might get, and calculations need to be done on the benefit of a long fix ( 5 years at 2.99%?) vs "what if they go up?".
If you've ridden this one down, it might be time to leave the last 10% of any falls for someone else.

What would Dame Jenny think of that?

Why isnt TSB matching kiwibanks one year rate of 2.65?

Because they're racist against 'aussie' banks?

Days to the General Election: 24
See Party Policies here. Party Lists here.