More banks are still making small home loan rate cuts but none are market-leading as rate offers coalesce around a very tight range

More banks are still making small home loan rate cuts but none are market-leading as rate offers coalesce around a very tight range

There are more home loan interest rate reductions to report, but these ones are minor.

In fact, even though we had a couple of reductions in the past few days, they are not market-leading. These recent changes are banks doing minor realignments to remain generally competitive without moving the market lower.

Today, BNZ has trimmed -14 bps from its one year Classic rate to 2.65%, a rate than now matches both ANZ and Kiwibank.

For an 18 month fixed term, the reduction is -10 bps to 2.69%, a rate that is +4 bps higher than ASB's 2.65%.

BNZ and Westpac are the only two main banks that have all their 'special' fixed rates from one year to five years below 3%.

Yesterday, Kiwibank adjusted its six month fixed rate down to 3.55%, matching ASB.

After these changes, among the 'special' offers, there is only 14 bps difference between the minimum and maximum main bank offers for a one year term. For a two year fixed term, the range is even smaller, just 10 bps.

For all practical purposes, you should be able to get the lowest carded rate from any bank. That means there is no need to pay more than ...

- 2.65% for one year fixed

- 2.65% for eighteen months

- 2.69% for two years fixed

- 2.79% for three years

... from any bank.

In fact, these should be a starting point. If your financials are strong (and these days that means you have both equity of more than 20% and your income is stable and certain), negotiation should get you discounts from there. How you take those discounts will vary, but it could be in forms other than a rate reduction. The main point to note is that you are in a strong position to negotiate if your circumstances are solid.

But that will not be the case if your finances are is an uncertain state.

There are challenger banks that offer lower rates again, and there are savings to be had if you are prepared to shift. At a minimum, you should talk to challenger banks to assess how much you are leaving on the table at the main banks. All of that involves 'work', but the reward could be thousands of dollars over the life of a fixed-rate term.

The minimum rates on offer from any bank are ...

- 2.55% for one year fixed

- 2.65% for eighteen months

- 2.65% for two years fixed

- 2.75% for three years

Back to the BNZ rate change, they have cut similarly for their Standard rates. And they have not announced matching term deposit rate cuts today, although you should expect they will.

And it is also worth noting that so far, no main bank, in fact no other bank, has followed Kiwibank with its full and impressive -1.00% cut to its floating rate.

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 24, 2020 % % % % % % %
ANZ 3.65 2.65 3.05 2.75 3.35 4.15 4.25
ASB 3.55 2.69 2.65 2.69 2.99 3.09 3.19
4.29 2.65 2.69 2.69 2.99 2.99 2.99
Kiwibank 3.55 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 2.65 2.65 2.80 2.89 2.99
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 2.95 2.58 2.79 2.68 2.79 2.99 3.445
SBS Bank 3.89 2.79 2.89 2.89 3.39 3.79 3.89
 [incl Price Match Promise] 3.39 2.65 2.65 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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you could go all out and have the floating rates column... go KIWI BANK
President of Property

Will be interesting to see what RBNZ says next week. But unemployment going through the roof. If they intending to go negative they better do it sooner than later. This is not about houses but encouraging investment and discouraging savings. We need all the help or we are stuffed as an economy. Kiwi dollar also stubbornly high.

It'll be the brit shalom mate. Banks claim their software isn't ready.

Looking for some advice re: new build.
We are looking at doing what was a kiwibuild (but now just requires we meet certain requirements) in bay of plenty.
500k for a 3 bedroom in a nice area.
With prices dropping is this a good call? We have 12% deposit but new regulations mean if the value of the new build drops too much by the time it is finished our equity might have dropped too much.
In saying that - this is the best new build price/deal we've seen (we have looked around). At this stage we are looking to go forward with it.
But I'd love some advice.

Read the fine print very carefully on any such contracts. Ex-kiwibuild might still have lots of fish hooks as the govt granted the land and subdivisions to encourage the build. Get your lawyer to have a good look. Also check the "sunset clause" if the property is not build yet. This clause deals with penalties, cancellations if not build in agreed timeframes.

How does this purchase sit with your long term plans? Think 3 - 5 year horizon at a time. I dont know enough about the Tauranga market but i am not a fan of small shoebox townhouses. The capital gains on these are usually low same as apartments.

At the end of the day, property purchasing is mainly gut feel and quite often emotional buy. If you have done enough research and feel confident, go for it.

I second looking at the sunset clause. You don't want to find out in 2 years when it hasn't been built, that the developer can just keep extending and keep your deposit.
I expect prices to drop, but by how much or when is anyone's guess. I would however be surprised if house prices dropped less than 10% in the next year.

If you listen to too many people it will never be the right time.There is nothing like the feeling of moving into your own new home.In the long term you will not regret it.Just do it.

"In the long term you will not regret it." What a claim! As if nobody has ever had buyer's remorse on a house.

Wait, does Jack Reacher = Yvil.

"In the long term you will not regret it."

That sounds like something that a real estate agent might say to persuade the potential buyer to transact.

There are lots of stories of people who have regretted purchasing residential property.
Here is just one -

I didn't realise Nike had a real estate division??