BNZ raises its floating mortgage rate, but only by 15 basis points

Personal Finance

BNZ follows ANZ and raises its floating mortgage rate by less than the RBNZ OCR increase, completing adjustments from the main banks. But the challenger banks are all yet to follow

8th Oct 21, 10:46am by David Chaston

BNZ has followed ANZ and raised its floating mortgage rate by less than the Reserve Bank's Official Cash Rate increase, completing the adjustments from the main banks. But the challenger banks are all yet to follow.

The BNZ increase is just +15 bps. But that makes it the second most expensive floating rate at 4.70% after Westpac's 4.84%. Kiwibank has the lowest floating rate among the main banks at 4.00%.

BNZ has not signaled any term deposit rate changes at this time.

The RBNZ hiked the OCR by 25 basis points on Wednesday and ANZ was the first to signal its change.

ASB was next out of the blocks saying it's "committed to holding its base business interest rate through to the end of 2021."

So, ASB’s variable home lending rate is unchanged at 4.45%.

Meanwhile, Kiwibank announced a series of increases to mortgage and savings rates.

Kiwibank's variable, offset and revolving lending rates are going up by the full +25 basis points. The new variable and offset rate will be 4%, and the revolving rate is being increased to 4.05%.

Then Westpac pushed through a full +25 bps hike, although it also raised some savings account rates modestly.

One useful way to make sense of these changed home loan rates is to use our full-function mortgage calculator which is also below. (Term deposit rates can be assessed using this calculator). But most calculators are really only useful for fixed rate mortgages.

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 how the floating rates of the main retail banks compare now.

as at October 8, 2021	Current	change	New	Effective
	%	bps	%	for existing
ANZ	4.44	+15	4.59	26-Oct-21
ASB	4.45	no change	4.45	n.a.
BNZ	4.55	+15	4.70	28-Oct-21
Kiwibank	3.75	+25	4.00	25-Oct-21
Westpac	4.59	+25	4.84	1-Nov-21

Bank of China	4.35
CCB	5.00
Cooperative Bank	4.40	+15	4.55	14-Oct-21
Heartland Bank	2.55
HSBC	4.49	+10	4.59	2-Nov-21
ICBC	3.69
SBS Bank	4.54	+25	4.79	16-Nov-21
TSB	4.54

We will update this table as each bank announces its rate reaction for home loans.

*You can see all advertised, or carded, bank term deposit rates for one to nine months here, and all rates for one to five years here.

Mortgage rates

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Source: interest.co.nz

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12 Comments

by fortunr | 8th Oct 21, 11:34am 1633646084

Nobody was really expecting a further full 25 basic points general increase to savings and mortgage rates, as this OCR increase was already mostly priced in by the market. So the title does not really make all the sense, to be perfectly honest.

I was actually slightly surprised by Westpac pushing through a full +25 bps hike; I was expecting a general increase by most banks of something more in the order of 10 to 15 bps, definitely not a full 25 bps.

What pleasantly surprised me was to finally see a hawkish tone by the RBNZ; even Orr might have finally come to a very belated realization that current ridiculous low rates are simply not sustainable.

by RCD | 8th Oct 21, 12:08pm 1633648118

To maximise profits the banks make a move higher in advance of the RB, claiming RB will follow, then when the RB moves they make another hike up.

Basically doubling up on the profits, while still drawing down the much lower RBNZ FLP rate, huge windfalls for the banks overall, the smiling assassins of finance slip the knife in your back while all the time claiming hardship.

A large number of recent buyers in the market will find out soon enough why there is a saying about Banks being Fair-weather Friends.

by ikimpaul | 8th Oct 21, 12:29pm 1633649389

Both correct and incorrect.

The banks have already added in .50-.60 BP on their fixed home loans since July. So they have put through double the OCR already on fixed home loans. 85% of NZ loans are currently fixed with 70% on 12 month rates.

The banks didnt need to adjust their fixed home loans as they had already increased on these between July and Sept. That said will be interesting to see if they adjust these fixed rates another quarter between now and the Nov RBNZ meeting.

What most banks have adjusted this week is their variable loan rates which make up a small proportion of their loan books. Typically offset and lines of credit loans have a variable rate - although some borrowers who want to vary their payments each month maybe just on a standard variable rate. These loan rates were not as heavily reduced when the OCR dropped. ie Westpac before the 2019 OCR drops had a variable rate of 5.65% - they moved this to 4.55% between Aug 19 and Mar 20- which is just a 1.1% reduction even though the OCR fell 1.5% during that time.

I believe the average reduction across the banks on their variable rates since Aug 19 was 1.2% - so they are in a position to pass less of the OCR increase through to their customers on variable loans.

Either way most home borrowers will have felt/ or about to feel a lift in their monthly repayments. Only those who fixed for a >2 year rate before July this year will be immune from the rate increases.

by RCD | 8th Oct 21, 12:34pm 1633649695

Temporarily immune, just like the vaccine it will wear off, and the axe will fall on the due date even if that is 18 months away.

by ikimpaul | 8th Oct 21, 12:51pm 1633650666

i was going to say that - its only a temporary reprieve for most borrowers - although 18 months can be a long time in the finance industry these days

by Carlos67 | 8th Oct 21, 12:12pm 1633648339

ASB TD's rates have remained unchanged for months and they have still not shifted as of today so not exactly "already priced in". I guess its going to take the next 0.25% increase in November to get things moving. Time to fix that mortgage if your lucky enough to have it due right now.

by Justa comment | 8th Oct 21, 12:41pm 1633650080

With the OCR now 0.50, the banks are still only paying 0.05 to 0.3 (ANZ serious saver) for savings accounts, all less than the OCR!! Most investors will still ignore 1.4% term deposits, so savings accounts are great business for banks at present.

by andreas_od | 8th Oct 21, 1:09pm 1633651785

that just suggests that their margin is way too high

by CWBW | 8th Oct 21, 1:50pm 1633654212

Looks like the Asian banks are the kindest.

So much for mate-ship in Tasman.

by Carlos67 | 9th Oct 21, 5:58am 1633712295

Like I have said ever since I was about 30 years old, the Australians set out to screw us at every opportunity. I was involved with them in at least 3 jobs over the years and they treat Kiwi's like dirt.

by MisterB | 9th Oct 21, 7:06pm 1633759591

Nothing quite like a bit of casual racism eh

by MisterB | 9th Oct 21, 7:03pm 1633759432

So many commenters who conflate fixed and variable rates and costs! Variable rates are typically more closely aligned with OCR and of course the RBNZ funding for lending program is directly linked.

fixed swaps are driven off market expectations and offshore activity… these drive retail fixed rates… mortgage and term deposit.