Heartland Bank launches a one year 1.99% fixed home loan rate

Personal Finance

Another challenger bank has launched even lower home loan rate offers today, the first time any mortgage rate has fallen below 2%. These Heartland offers are digital-only

12th Oct 20, 2:07pm by David Chaston

Home loan rate changes are moving fast today (Monday). And it is not the majors who are setting the pace, it is the challenger banks.

Hot on the heels of SBS Bank releasing market-leading fixed mortgage rates, now Heartland Bank has gone even lower.

Their latest offer is just 1.99% for one year fixed.

Also on offer are two year or three year fixed term options, for 2.35% and 2.45% respectively. These are -90 basis points, -62 bps and -94 bps reductions respectively from their previous levels.

All these three new fixed rates are now market-leading.

And they have cut their floating rate as well, taking it down to 2.95% and well below the Kiwibank 3.40% level, which until today was the lowest floating rate in the market. For Heartland, this is a -1.00% reduction from their previous offer.

Heartland re-entered the market in March 2020 with a digital, self-serve offer where customers could apply and receive approval without needing to make an appointment, visit a broker, or arrange a house call. In this trial, all available funds were approved within a month of the launch, demonstrating that their ‘do-it-yourself’ online offering had market appeal.

“Digitalisation means a low cost of onboarding, which can be passed on to borrowers. It also means speed – an answer can be given in minutes, so customers don’t have to endure the lengthy processes of mainstream banks. Moreover, Heartland’s group structure provides it with broad funding flexibility,” said Heartland Group CEO Jeff Greenslade.

To be eligible for Heartland Home Loans, customers must be refinancing or purchasing a standalone house on a single section in a major New Zealand centre, have a deposit or equity of at least 20% and intend to live in the home.

This offer is described as being "available for a limited time". They are not available for new-build projects.

To be eligible for a Heartland Home Loan you also need your income paid into a Heartland YouChoose Account. And, existing Heartland home loan customers will not automatically be moved across to a Heartland Home Loan. However, anyone who meets the eligibility requirements is welcome to apply, including their customers with an existing home loan.

Details of the new low SBS Bank fixed rate reductions are here.

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 October 12, 2020	%	%	%	%	%	%	%

ANZ	3.55	2.55	2.65	2.69	2.79	4.15	4.25
	3.39	2.55	2.49	2.69	2.79	2.99	2.99
	3.39	2.55	2.49	2.69	2.79	2.99	2.99
	3.55	2.55		2.79	2.79	3.09	3.19
	4.15	2.55	3.25	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	2.65	2.65	2.65	2.80	2.89	2.99
Co-operative Bank	2.55	2.55	2.69	2.69	2.79	2.99	3.19
Heartland Bank		1.99		2.35	2.45
HSBC	2.79	2.45	2.55	2.60	2.65	2.79	2.89
ICBC	2.95	2.45	2.60	2.65	2.79	2.89	2.99
	3.39	2.55	2.49	2.49	2.49	2.99	2.99
[incl Price Match Promise]	2.89	2.49	2.65	2.65	2.79	2.99	2.99

In addition to the above table, BNZ has a unique fixed seven year rate of 5.20%.

* TSB also offers all fixed rates below 3% too, but that is only via their Price Match Promise.

Fixed mortgage rates

Select chart tabs

Source: interest.co.nz

Source:

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42 Comments

by realterms | 12th Oct 20, 2:15pm 1602465337

Is heartland a serious enough bank to worry the majors at all?

by FamilyGuy | 12th Oct 20, 2:45pm 1602467107

Note that official cash rate is 0.25% :).
Feeding to housing ponzi. hope I'm alive to see what happens in long run and how this great country was taken over by rich, politicians and fools (voters).

by bw | 12th Oct 20, 2:19pm 1602465555

Quelle surprise!

by Lanthanide | 12th Oct 20, 2:22pm 1602465772

BNZ offered a 3.99% fixed for 2 years rate back in November of 2018, which at the time was a very good offer. I ended up fixing all of my non-offset mortgages at that rate, so they're all coming up for renewal in the next month.

I suspect that BNZ had a fair bit of uptake for the offer, so they may be looking to have another echo campaign to re-capture everyone coming off that rate offer.

Here's the article for it: https://www.interest.co.nz/news/96835/bnz-unveils-two-year-395-home-loa… look at the rate table, eye-popping!

by bw | 12th Oct 20, 2:25pm 1602465905

3.99% for 7 years ought to do it!
Fund it with Term Deposits at 2.99% for that run, and they'll be hit on both sides! Easy, safe, fixed money.

by CJ099 | 12th Oct 20, 2:34pm 1602466487

Got to keep the Property Ponzi scheme going at any cost. Falling interest rates can't keep it going forever.

by bw | 12th Oct 20, 2:52pm 1602467532

Once the banks start drinking the negative interest rate cool-aid from the TLF facility, it's almost game over for them.
Having your Principal diminished and risk underwritten by the Government leads to all sorts of unforeseen problems. Or maybe they are already there in plain sight, and there's' nothing they can do about it now?
If so, it won't be long now.....The Smart have already made a break from the cult for it into the Forest of the Unknown. But at least it's a forest that they understand.

by Andrewj | 12th Oct 20, 3:08pm 1602468520

When I started out in the mid 80's I paid %18 interest and %23 if I went over my limit. My business could afford that, I had no problem paying the bills but interest was often my biggest cost.
Fast forward to today and there is no way my business with %40 debt could even afford %8.

So what is happening is our ability to pay has being eroded, interest rates are falling to reflect this new reality.

Eventually we will run out of rope and yet out incomes will continue to be eroded with poor outcomes down the track. Govt debt will push the recovery further out and make it less of a recovery than it could have been.

by ShoreThing | 12th Oct 20, 3:15pm 1602468907

Are interest rates decreasing commensurate to our ability to service increasing debt levels, or are debt levels increasing commensurate to our ability to service at decreasing interest rates?

by Andrewj | 12th Oct 20, 3:21pm 1602469291

Interest rates are falling because of cost increases, often associated with, according to Audaxes, the NPV of future liabilities. It's our fault for thinking it's okay to capitalise the low interest rates into non productive assets.

by MadMax | 12th Oct 20, 5:09pm 1602475783

Indeed

by AndyBBrown | 13th Oct 20, 11:58am 1602543518

Do you mean to say that businesses cannot earn as they used to - that their earnings are much less?

by kiwiriwi | 12th Oct 20, 6:53pm 1602482004

A bit of a sham Heartland is:
- Maximum lending amount is $1mil
- All online, so doesn't cater to any nuanced applications
- 20% deposit (not so bad, but good luck FHBs)
- Only single or joint applicants, so not sure how FHBs can use bank of mum and dad
- Only stand alone houses

by bw | 12th Oct 20, 3:11pm 1602468696

Sham? You're not suggesting that the financial system and its participants are not what they purport I hope?!

by ShoreThing | 12th Oct 20, 3:16pm 1602468999

Don't forget it needs to be a freestanding home, lots of terraced housing being built these days.

by junglejuice | 12th Oct 20, 3:51pm 1602471072

Re: joint applicants - assuming they want to protect family wealth, FHBs and their parents should be documenting it as a loan from M&D (or better yet, a family trust) to the couple that is to be repaid on certain events (sale of the house, separation, death of M&Ds child, etc). That way SIL/DIL doesn't walk away with 50% of M&Ds money if they split up.

by Lanthanide | 12th Oct 20, 3:53pm 1602471238

Those really aren't onerous terms at all. In fact I'd suggest that if you fall outside of them, you're probably a bit risky.

by OnTick | 12th Oct 20, 4:46pm 1602474364

Exactly. I'm sure that probably captures about 75%+ of the market lol! It's a basic Skinny no frills type mortgage, not designed for everyone, but if it's for you, it's cheap and that's what the 75% are looking for.

by MisterB | 12th Oct 20, 6:48pm 1602481700

There is no way that is 75% of the market. For one, low deposit is about 15% of market alone, take away investor loans, another 15-20 percent, then cross leases, terraced houses and anything not in Auckland, Wellington, Chch or Dunedin ... not sure that would even come to 30%

by Poppyc | 12th Oct 20, 7:45pm 1602485113

Cross leases and units are allowable

by Lanthanide | 13th Oct 20, 12:43pm 1602546223

Why are you taking away investor loans?

by MisterB | 14th Oct 20, 7:23am 1602613388

Because heartland doesn't do loans with non owner occupied security

by kiwiriwi | 12th Oct 20, 6:57pm 1602482254

Rest of NZ it's a solid offer, but for first home buyers in Auckland - it's useless. Please enlighten me if there's any single, standalone houses left for 1M in the Auckland region.

by Pragmatist | 13th Oct 20, 8:32am 1602531138

Tons, and the limit is a $1m loan, so 20% deposit = $1.2m property

by AndyBBrown | 13th Oct 20, 12:01pm 1602543662

What is the purpose of borrowing a million for a place in Auckland - what is the benefit of Auckland?

by MisterB | 12th Oct 20, 6:44pm 1602481458

Also only main centres and apparently no cash contribution l, which is standard fare with every lender.. so not sure it’s THAT different to other banks if you roll it all in

by Basil brush | 12th Oct 20, 3:23pm 1602469422

Great to see some innovation in this industry. Well overdue.

by eskyrider | 12th Oct 20, 3:38pm 1602470307

Now watch the rates tumble. And I am not talking about council rates.

by Crazy Horse | 12th Oct 20, 3:48pm 1602470911

Keep your powder dry folks, there is going to be a "backlash" from all of this ....it can't keep going on like this ad infinitum ....you may be able to reduce your interest payments BUT what about the principal owed on these new mortgages ???

It will be an overseas event that will eventually "tip the scales" in NZ .....until then 90% of the sheeple will carry on believing His Lordship Ashley Church, granny herald and the One Roof BS !

by Andrewj | 12th Oct 20, 4:04pm 1602471880

yep, my mileage on my diesel ute goes up %10 pa and they try to tell us there is no inflation. Costs are climbing.

by causecelebre | 12th Oct 20, 4:10pm 1602472246

Was Covid not supposed to tip the scales? What sort of event are you hoping for? If any NZ govt lets the market fall to the point that many here are waiting for then we have bigger problems than a few houses. Can you not see that the NZ economy is underpinned on housing? Investors are going nuts and the vast number of those mortgages are interest only hoping for capital gain to account for miserable cash flows they are getting now. This isn't considered investing, rather speculating. That said, these same investors can have a some confidence that the market will be propped up not matter what.

by Fritz | 12th Oct 20, 4:28pm 1602473335

Covid was never a financial crisis. It is a financial crisis (like the GFC) that will cause havoc.

by Crazy Horse | 12th Oct 20, 5:51pm 1602478310

causecelebre ...do you know anyone at all who has lost a job ? .......btw whether COVID-19 arrived or not doesn't really make much difference, as it just "bought forward" what is going to happen .....and "who" is going to prop up this market, as you mentioned ? .....I can tell you one thing for sure, it won't be your "friendly bank"

by Bugger | 12th Oct 20, 4:07pm 1602472059

I just can't believe we have created a system where one person can play financial god. Give wealth to some, take it away from others. Where is the price discovery.

by Carlos67 | 12th Oct 20, 5:03pm 1602475407

Did you not see the report that America's top richest 100 have made hundreds of billions since the start of the Covid-19 crisis back in March ? The system is broken, it has been for years that's because the people at the top are making the rules and are simply looking after one another.

by Bugger | 12th Oct 20, 8:11pm 1602486701

Well, it sets a dangerous precedent...
Buy assets (shares, property), create a global disaster - pandemic being the preferred option, watch stimulus action from the financial gods, make a killing (excuse the pun).

by Small Kev | 12th Oct 20, 4:15pm 1602472509

Someone’s got to be the first.

by Zachary Smith | 12th Oct 20, 4:26pm 1602473174

Mortgages only for standalone homes in the best areas at reasonable prices with at least 20% equity. It seems they want to scoop up the best and safest properties.

by WellingtonInvestor | 13th Oct 20, 1:08am 1602504505

Kind of tells people what the types of houses not to buy. Yet the governments had previously been pushing people to buy apartments due to houses being too expensive.

by Carlos67 | 12th Oct 20, 5:00pm 1602475215

I would be taking the best short term rate you can get. Still predicting 1.75% accross all the major banks by March - April 2021, its almost set in stone. The economic pain is really going to start to bite hard after Christmas, its the only way to keep the party going now. Hopefully throw in some of that new legal weed into the mix to keep this all going so even if you wanted to leave, you can no longer find the door.

by Officebound | 12th Oct 20, 8:33pm 1602488016

Would be a foolish move to wait 6 months for a .24% drop, when you are paying at least .5% premium on 1.99% while you wait.

by Squishy | 12th Oct 20, 10:18pm 1602494339

Makes sense to me, they can concentrate on the most profitable market segments and pass through real savings. The model that makes far less sense is trying to be everything to everyone offering full service with the bells and whistles (and inevitably ending up mediocre at everything.) Pick a fight you can win decisively.