Fixed mortgage rates are on the move again as the background wholesale rate curve steepens.
ASB, New Zealand's second biggest mortgage lender, has made some changes, reducing some short term fixed rates, and raising some of its longer term rates.
The bank has cut its one year fixed rate by four basis points to 2.25%. At that level it is now lower than all its main rivals for a 12-month fixed contract. Its new rate matches the one year offers from ICBC and HSBC.
ASB has also cut its six month fixed rate by 40 basis points to 2.99%, which is now well below all its main rivals.
However, for terms of three, four and five years fixed, ASB has raised rates.
Its three year fixed rate offer is now 2.89%, up 24 basis points.
Its four year fixed rate offer is now 3.19%, up 20 basis points.
And its five year fixed rate offer is now 3.39%, up 40 basis points.
ASB's three year rate is now higher than its main rivals. Its four and five year rates are pitched above all key rivals except ANZ.
ASB last changed fixed home loan rate offers in late January at a time other large banks made moves too, all lower and at the short end of the rate set. It is likely other banks will follow Friday's ASB changes.
Update: Westpac has now announced that it will also change its rates, both up and down, on Tuesday, April 27, 2021.
Since the January changes, wholesale swap rates have moved higher, including for the one year term, up 10 basis points. Short-term rate rises have been restrained by central banks, including the Reserve Bank of New Zealand (RBNZ), by large, aggressive secondary market interventions. In the case of the RBNZ, it is via their Large Scale Asset Purchase programme. They intervene to add demand so as to keep interest rates lower than they would otherwise be.
However, swap rates for three years are up 25 basis points, for four years they're up 35 basis points, and for five years they're up 45 basis points.
Perhaps the reason the one year rate offer from ASB has been cut is that they have accessed $500 million of the RBNZ's Funding for Lending Programme, which delivers three year money at 0.25%. All major banks other than ANZ have now dipped into that programme.
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 April 23, 2021||%||%||%||%||%||%||%|
|Bank of China||3.45||2.35||2.45||2.55||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 (*FHB only)||2.29||2.09*||2.59||2.59||2.79||3.09||3.19|
|[incl Price Match Promise]||2.89||2.25||2.49||2.49||2.65||2.99||2.99|
In addition to the above table, BNZ has a unique fixed seven year rate of 5.20%.