Heartland cuts its floating mortgage rate

The bank with the lowest floating home loan rate has cut it aggressively again, setting it about 200 basis points lower than most rivals - provided you apply online (and without a broker)

Personal Finance

The bank with the lowest floating home loan rate has cut it aggressively again, setting it about 200 basis points lower than most rivals - provided you apply online (and without a broker)

9th Nov 20, 11:20am by David Chaston

Heartland Bank has cut it's floating mortgage rate by 45 basis points to 2.50%. This keeps it as the lowest floating mortgage rate of any bank.

Heartland home loans are a digital-only offering - which means the application can only be online, and only direct with Heartland. It cannot be sourced through brokers (unless you pay the broker directly in a private arrangement, of course).

To be eligible, customers must be refinancing or purchasing a standalone house on a single section, have a deposit or equity of at least 20% and live or intend to live in the home. A credit of $750 is available for customers who refinance their home loan to Heartland and take out a loan on the floating rate for at least 12 months. (Clawback applies if this is changed early.)

Heartland offers fixed term home loan rates and these are all lower than the new floating rate offer. 1.99% for 1-year fixed, 2.35% for 2-year fixed, and 2.45% for 3-year fixed, and none of these rates changed today.

Here is how Heartland's new low floating rate compares with all the other retail bank offers currently in the market.

November 9, 2020	Floating rate	above
		'best rate'
	%	%
ANZ	4.44	+1.94
ASB	4.45	+1.95
BNZ	4.55	+2.05
Kiwibank	3.40	+0.90
Westpac	4.59	+2.09

Bank of China	4.35	+1.85
Co-operative Bank	4.40	+1.90
China Construction Bank	5.00	+2.50
Heartland Bank	2.50	-
HSBC	4.49	+1.99
ICBC	3.69	+0.79
SBS Bank	4.54	+2.04
TSB	4.54	+2.04

There is a lot on the table.

The only other lower floating rate is the one Simplicity KiwiSaver offers its members for a first home loan - and you have to win a ballot to get their 2.25% offer.

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16 Comments

by morphyoss | 9th Nov 20, 11:34am 1604874853

Floating rates are a joke and as it turns out a bit of a cash cow for the banks as they simply not moved with the market. At least the Aussie banks are really looking out of touch now.

The pressure too now grows for them to move. I wonder too if Kiwibank matches this.

by Whatwillhappen | 9th Nov 20, 11:38am 1604875109

I currently have 2.9% floating with Kiwibank, after a union-negotiated discount is applied. The Aussie banks didn't match Kiwibank when it cut its floating. Why follow an even more insignificant bank now?

by morphyoss | 9th Nov 20, 4:23pm 1604892237

Good point, i suspect a 2% drop on someone's mortgage who is on a floating with one of them will open some eyes though. Minor bank or not.

It's much like electricity providers, it will be people who move that benefit, being on a floating makes it much easier to move so lets just hope that people make the move.

by MortgageBelt | 9th Nov 20, 11:51am 1604875913

Great floating rate for existing homeowners - and in the latter half of their mortgage life.
ITs just the hassle of changing accounts etc.

by realterms | 9th Nov 20, 8:34pm 1604907246

by bw | 9th Nov 20, 12:49pm 1604879382

From a week ago:

Robertson will meet with Orr on Monday, November 9....Robertson wouldn’t be drawn on what he wanted to talk to Orr about.
"interest.co.nz asked Robertson whether he wanted the RBNZ to reinstate loan-to-value ratio (LVR) restrictions.
Robertson responded: “I’ll have more to say about monetary policy and other matters shortly."

If the banks are to be believed, then they haven't changed their LVR criteria anyway; still evaluating loans based on a notional 7.25% repayment hurdle, regardless of the actual cost of debt. And yet....here we are.
Something has to be done to divert debt assumption away from speculation towards productivity ( wages, in other words). And just 'changing' LVR's that are still in place will not be enough.

by Lanthanide | 9th Nov 20, 1:12pm 1604880731

ANZ specifically said they kept the 20% LVR requirement for first home owners, but relaxed the investor requirements from 30% to 20% LVR.

by Pragmatist | 9th Nov 20, 1:21pm 1604881294

7.25% test rate? Not for many months now, down to 5.8% at a couple of the banks now last I heard.

by bw | 9th Nov 20, 1:32pm 1604881920

Thanks for more informed info the both of you.
But doesn't this just shout" The shorts are out now!' to you?
You know; when all those who held out, are 'in' and there's no one left to catch the market as it falls?

by Audaxes | 9th Nov 20, 1:43pm 1604882613

Banks still desperately seek to invest in assets that offer a return of their money, rather than a return on it.

The Treasury has today announced that NZ$4.0 billion of nominal 15 May 2028 New Zealand Government Bonds have been issued via syndication.

The bonds, which carry a coupon of 0.25%, were issued at a spread of 13 basis points over the 15 April 2027 nominal bond, at a yield to maturity of 0.305%. Total book size, within the initial pricing guidance range of 13 to 17 basis points, exceeded NZ$18.0 billion.

by Sibrit | 9th Nov 20, 1:44pm 1604882674

Wow. That's a really low rate. Makes no difference to me though. I can service a 10% rate but I no longer have the 20% deposit needed since house prices went up again. Really need them to stay flat for 6 months so I can catch up.

by Nzdan | 9th Nov 20, 2:29pm 1604885362

That's what's often overlooked when talking about housing affordability. Everyone points to the mortgage serviceability numbers, working on a 30 year table mortgage. Ignoring the 3 - 5 years (or longer if house price inflation outstrips savings) needed to attain a down payment.

Once you get that mortgage, don't even begin to think you're going to rely on general wage inflation to erode the value of the debt like back in the 70's - 80's.

by Andrewj | 9th Nov 20, 2:10pm 1604884238

with houses around here going up at %10 a month what could possibly go wrong?

by Audaxes | 9th Nov 20, 2:14pm 1604884468

It's called an asset bubble.

by WellingtonInvestor | 9th Nov 20, 3:32pm 1604889174

Apparently NZ doesn't have a 'housing bubble'. But I am not sure about that.

by WellingtonInvestor | 9th Nov 20, 3:32pm 1604889136

I am now looking at a house to buy in another area, but also a house to live in in the future, as the interest rates for saving at the bank are now too low. This weekend there were certainly a lot of people out looking at open homes, some who are in similar situation. . But I probably won't rent it out in the meantime, as the ones I am looking at are nice, and don't want to gamble getting a bad tenant, for a relatively small amount of return. Plus I don't think they an be rented without some work, such as more insulation etc. Capital gains over a long term will hopefully be far better. So it will likely become another ghost house in the meantime, or use it as a weekender for myself..