Well, that didn't take long.
ANZ is raising rates for all fixed term mortgages from six months to five years.
Now ANZ only has an advantage over its main rivals at the one year fixed rate and only for six basis points.
Further, its five year increase of +30 bps takes it closer to having a 5% mortgage rate, and when that happens it will be the first time we have seen that in 26 months (BNZ in August 2019).
Update: TSB has also raised its fixed rates.
Here is our earlier report before the ANZ rate announcement that closed off some of the exploitable advantages.
Earlier, both HSBC and ICBC raised rates.
Basically, the current levels are coalescing around levels first moved to by ASB.
And this is despite overall bank reluctance to take up the Reserve Bank Funding for Lending option. So far only $6 billion of the $28 bln the RBNZ allocated for the programme has been taken up. The cost to a bank is the Official Cash Rate, for a term of three years. The reluctance may be because the OCR is expected to rise sharply from its current 0.25%, and starting in early October.
One useful way to make sense of these changed home loan rates is to use our full-function mortgage calculators. (Term deposit rates can be assessed using this calculator). (Our calculators are all back running now.)
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. But break fees should be minimal in a rising market.
Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at the moment.
| Fixed, below 80% LVR | 6 mths | 1 yr | 18 mth | 2 yrs | 3 yrs | 4 yrs | 5 yrs |
| as at September 29, 2021 | % | % | % | % | % | % | % |
| ANZ | 3.55 +0.16 |
2.79 +0.19 |
3.09 +0.24 |
3.25 +0.26 |
3.49 +0.09 |
4.59 +0.30 |
4.89 +0.30 |
 |
3.55 | 2.85 | 3.09 | 3.25 | 3.55 | 3.99 | 4.29 |
 |
3.55 | 2.85 | 3.09 | 3.25 | 3.55 | 3.99 | 3.99 |
 |
3.55 | 2.95 | 3.15 | 3.49 | 3.89 | 4.19 | |
 |
3.29 | 2.85 | 3.09 | 3.25 | 3.49 | 3.99 | 4.29 |
| Bank of China | 3.45 | 2.45 | 2.65 | 2.85 | 2.99 | 3.65 | 3.95 |
| China Construction Bank | 2.65 | 2.65 | 2.65 | 2.85 | 3.25 | 3.55 | 3.99 |
| Co-operative Bank (*FHB only) | 2.85 | 2.65* | 3.09 | 3.25 | 3.49 | 3.99 | 4.29 |
| Heartland Bank | 2.15 | 2.45 | 2.65 | ||||
| HSBC | 2.89 | 2.69 +0.29 |
2.89 +0.24 |
3.09 +0.30 |
3.29 +0.30 |
3.59 +0.20 |
3.84 +0.15 |
| ICBC | 2.85 | 2.45 +0.10 |
2.65 | 2.85 +0.10 |
3.15 +0.10 |
3.65 +0.20 |
3.95 +0.20 |
(*FHB only) |
2.79 | 1.99* | 2.69 | 2.89 | 3.09 | 3.49 | 3.79 |
 |
2.89 | 2.79 +0.24 |
3.09 +0.30 |
3.25 +0.30 |
3.49 +0.24 |
3.99 +0.30 |
3.99 |
Fixed mortgage rates
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Daily swap rates
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26 Comments
Sharon Zollner on twitterr worried that a deposit and credit mismatch could impact future lending conditions:
https://pbs.twimg.com/media/FAVGx_FVkAMn8ZR?format=png&name=900x900
I may have my wires crossed here - but if there are people preferring the 5-year rate to the 3-year rate then there are people thinking that interest rates are about to spike absolutely massively - or alternatively the 5-year rate isn't very competitive and the banks are making a lot of money from people with either low risk tolerances, or from people unaware what future rates they are implicitly expecting
Which is not the same as what you said in your first post. The 5 year rate is not set by crystal ball gazing and taking guesses as to what the interest rates will be in 5 years, its set by what it costs to secure funding now, plus margins. Banks aren't wild gamblers, they practice arbitrage, buy debt, resell it with a margin on top.
Time will tell whether those that take these 5 years rates made a good guess or not, a lot could change in the next three years. Or maybe they just want certainty, which is understandable.
100% agree that trying to accurately predict any interest rate is a fools errand – but not so much if you are just looking for a “best guess” or more simply an indication of the magnitude of movement. The difference between fixed rates of different terms surely gives the most information about this (what else gives more?), and it’s interesting to see that this suggests the “best guess” future NZ residential mortgage rates will be jumping up very high.
To return to any semblance of sensical values, the housing market would need to drop by at least 40%. Current values are completely nonsensical and totally out of sync with economic fundamentals, and only sustained by artificially, temporary and un-sustainably over-loose monetary conditions.
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