Westpac moves mortgage rates up sharply, following ANZ

Personal Finance

The Red Bank follows ANZ with a range of interest rate increases for both home loans and term deposits

21st Oct 21, 1:25pm by David Chaston

Quickly, the next bank to raise rates in ANZ's shadow is Westpac.

It has raised both home loan and term deposit rates.

Westpac's mortgage rate increases range from +14 basis points to +34 bps. That takes its one year fixed rate to 3.19% and two year fixed rate to 3.79%.

At these levels, Westpac is embedding in a 5 bps advantage over ANZ at the one year carded rate term, but is 9 bps less competitive than ANZ for two years.

Other banks, especially the main ones, are sure to follow soon. We will update this story when they do.

On the term deposit front, Westpac has added between +10 bps and +20 bps to all carded offer rates. Our term deposit rate change article has been updated to reflect the new Westpac rates.

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).

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 October 21, 2021	%	%	%	%	%	%	%

ANZ	4.00 +0.45	3.24 +0.45	3.54 +0.45	3.70 +0.45	3.94 +0.45	5.04 +0.45	5.34 +0.45
	3.55	2.99	3.29	3.45	3.69	3.99	4.29
	3.55	2.99	3.29	3.45	3.69	3.99	3.99
	3.55	2.95		3.30	3.65	3.89	4.19
	3.69 +0.14	3.19 +0.20	3.49 +0.24	3.79 +0.34	3.99 +0.30	4.29 +0.30	4.49 +0.20

Bank of China	3.45	2.69	2.89	3.09	3.39	3.65	3.95
China Construction Bank	2.99	2.99	3.29	3.69	3.99	4.29	4.39
Co-operative Bank (*FHB only)	2.99	2.79*	3.29	3.60	3.89	4.14	4.29
Heartland Bank		2.35		2.60	2.90
HSBC	2.89	2.69	2.89	3.09	3.29	3.59	3.84
ICBC	2.85	2.45	2.65	2.85	3.15	3.65	3.95
	2.89	2.75	2.99	3.15	3.45	3.95	3.95
	2.89	2.74	3.04	3.20	3.44	3.94	3.94

Fixed mortgage rates

Select chart tabs

Source: interest.co.nz

Source:

Daily swap rates

Select chart tabs

Source: NZFMA

Comprehensive Mortgage Calculator

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75 Comments

by Yvil | 21st Oct 21, 1:38pm 1634776703

Those who have been reading Interest for a while know that I have been debating against house price drops over many years, I have been called a spruiker and worse. I do absolutely believe now, that house prices rises will come to an abrupt end in 2022 and that they will quite possibly fall

by Nifty1 | 21st Oct 21, 1:40pm 1634776842

house prices rises will come to an abrupt end in 2022 and that they will quite possibly fall

Wow big call, possibly fall even...

by rastus1 | 21st Oct 21, 1:48pm 1634777313

...trying to rescue some credability? Too late.

by pdemp | 21st Oct 21, 6:11pm 1634793084

To be fair, his prediction of price rises has to date been correct.

by Jamin | 21st Oct 21, 6:18pm 1634793488

It’s a sign of strength when someone shows they can change their mind in the face of new information. So yes, lots of credibility.

by al123 | 21st Oct 21, 6:25pm 1634793944

Well yes, but it would be nice to see that go both ways. I recall lots of dishing out to people who changed their mind about price falls because the RBNZ massively dropped interest rates. They didn't get plaudits for credibility. They got repeatedly dumped on for being wrong and being DGMs and a lot of other nonsense.

by Yvil | 21st Oct 21, 7:44pm 1634798688

Thanks Pdemp & Jamin

by EarlyMillenial | 21st Oct 21, 1:47pm 1634777235

What a doom merchant!

by morepork | 21st Oct 21, 1:59pm 1634777947

It does feel that way, rising interest rates, a halt to immigration and high building does seem like it could be the perfect storm. But I've learned to never bet against houses in NZ.

However people are reluctant to sell for lower prices than what they paid, so I wonder if the nominal prices could stay much the same, but with current inflation levels the real prices could still be falling by 5% per year.

by tothepoint | 21st Oct 21, 8:46pm 1634802365

In fact, Yvil's comments and predictions have a very strong record of reliability/accuracy.

There's no way that the DGM come anywhere near Yvil when it comes to credibility and reputation. (And, yes, that's stating the obvious.)

TTP

by Yvil | 21st Oct 21, 3:43pm 1634784197

Thanks TTP

by Cheetahlegs66 | 21st Oct 21, 8:33pm 1634801587

Enjoy your opinions Yvil. The urban planning background is an asset. Lot of opinionated ignorant fools here (yes, I am one of them). But i think you and Te Kooti are often on point. Disclaimer-I am a privileged bald headed boomer.

by Independent_Observer | 21st Oct 21, 4:15pm 1634786115

That's why he sold his house in Auckland (and gloated about his profits) because he thought prices might fall......just before the market went up 30%!

But yes very strong record of accuracy....

by HouseMouse | 21st Oct 21, 4:17pm 1634786243

Yes that is 'conveniently' ignored, and I see the old BS merchants are patting themselves on each others' backs again...

by printer8 | 21st Oct 21, 5:23pm 1634790202

Independent Observer

You are not in a position to be poking fun at Yvil. You admit you have been calling a bubble burst for seven years now and in that time house prices have more than doubled.

At the time of the onset of Covid you were calling a fall at the extreme end of 50% plus fall . . . what a gnome call was that.

A couple of years ago you said that you did not own a home and your comments suggest that you have not since done so. There is one big loser between the two of you and it ain’t Yvil.

Given your poor calling over considerable time, having not owned property, not having experience of mortgages, and burying your head by outright dismissing rather than critically analysing economists comments on the market and interest rates you are would seem the least informed commentator and less qualified on this site.

Yvil has made numerous calls on the market direction which have proved correct. To be calling a flat or even some correction given the current conditions is another good call . . . but all you are capable of is cheap shots which make you sound like a right royal Turkey. Pathetic.

by Independent_Observer | 21st Oct 21, 8:01pm 1634799671

Haven't even been a member of this site for 7 years p9 - get your facts straight!

Great to see you setting the standards of behaviour for this site by calling people losers, turkeys and pathetic. Nice complimentary comment - thank you.

by printer8 | 21st Oct 21, 8:27pm 1634801274

You are wrong yet again son; you posted early 2020 was that you had been calling bubble burst for over five years*. Embarrassing as it is, you put your self out there and in this instance holding Yvil accountable - so it’s also about your credibility. So stop trying to dig your way out.

Cheers :)

* Happy to dig the post out but currently on holiday in South Island.

by Independent_Observer | 21st Oct 21, 8:47pm 1634802431

Oh I'm wrong again - oh dear how careless of me. You are right I have lost all my credibility and I feel terrible about that (not...)

Try to enjoy your holiday if that is possible (grumpy old boomer?)

by lostinawoods | 21st Oct 21, 9:42pm 1634805779

Well, no one (ok, almost no one) could have predicted neither pandemic nor the way the Gov & RBNZ handled property bubble. What they say and what they do is quite often opposite, as well as it's quite contradictory to what one would think is good for the country.

So nothing wrong with being wrong on predictions really. Let's keep it to debate folks, and not ego-measurement contest.

Yvil, what's your definition of fall?

by Yvil | 21st Oct 21, 9:55pm 1634806550

Well I suppose even 1% down is a fall but I think more importantly for a real fall to occur it needs to happen consistently over 3 months and across various measures (average, median & HPI).

How much is RE likely to fall in 2022? Logic says 20% is not unreasonable at all but then again, the RE market has made a mockery of logic for a while.

For me though, the main driver has always been interest rates, that's why I finally think the party is over

by JamesM | 21st Oct 21, 10:49pm 1634809742

Hi Yvil- completely agree with you that interest rates drive the property market. I am curious though given the rapidly increasing construction costs if that might hold values up? Thoughts?

by Carlos67 | 22nd Oct 21, 10:09am 1634850550

Exactly right, as inflation kicks in everything rises so I very much doubt we will see house prices drop. At best there will be slow to no growth in house prices BUT again its all down to the government isn't it, if they simply open the floodgates to foreigners with money and then its away we go again.

by Yvil | 22nd Oct 21, 11:01am 1634853697

When things get tough, the price is not set by the vendor (the developer who has higher costs) but more by what the buyer can afford. If interest rates keep rising, the developer may ask higher price for his new build to cover his costs but he will end up accepting whatever a buyer can afford.

Yes there is of course the possibility of a major change in settings, (immigration, finance etc…) which could support the RE market yet against in the absence of any additional support I stand by my prediction of a flattening to a reduction house values up to 20%

by bw | 21st Oct 21, 2:12pm 1634778767

You could be right.

But what a shocking cost to the economy and the future of New Zealand your 'being right' has witnessed.

Key knew what needed doing in 2007. Ardern did in 2016; both whilst on the campaign trail, only to see fear of political reality smother their beliefs when it came time to be courageous and act. (NB: Key had the GFC and The Earthquake to use as cover for what needed to be done, so avoid the blame. Likewise, Ardern had Covid. But both let good crises go to waste)

Will Ardern and Collins, together, have the courage to see us belatedly on a better course? As an eternal optimist - I hope so!

(NB: Collins knows she's a Dead-Duck - so she's got nothing to lose and everything to gain in a show of Statesmanship)

by fortunr | 21st Oct 21, 3:04pm 1634781893

Well, you have been right in most of your calls in the past, and this has got to be acknowledged. I remember quite well how you went against "common wisdom" last year when we were in full panic mode due to the pandemic, and stating that house price rises were not off the cards; and gosh you were so right.

by HouseMouse | 21st Oct 21, 3:24pm 1634783071

Oh right, backed up by his action of selling his house...

by Independent_Observer | 21st Oct 21, 4:16pm 1634786176

Exactly...

by HouseMouse | 21st Oct 21, 4:18pm 1634786303

He's a weirdo

by Yvil | 21st Oct 21, 4:27pm 1634786879

Another well written, constructive post, full of knowledgable insights

by Yvil | 21st Oct 21, 3:42pm 1634784153

Thanks fortunr

by Small Kev | 21st Oct 21, 3:10pm 1634782223

Expect mass pull back on spending, think twice before starting a business now.

Much needed artificial correction is here but for how long before RBNZ to drop the rates again to save everyone?

Feeling for the new investors, got to pay to learn how to play the game right? Hang in there if you can and see you in another 10 years or so when the cycle starts again.

by theglc | 21st Oct 21, 3:36pm 1634783800

Can see any drops happening while inflation keeps running rampant

by theglc | 21st Oct 21, 3:35pm 1634783720

We havnt even taken the OCR off the emergency settings, and even these small increases are going to cause damage.

It just shows how far the Ponzi has been driven

by Brock Landers | 21st Oct 21, 3:41pm 1634784071

What on earth could possibly be worse than being called a spruiker? The spruiker is the most lowly thing there is.

by tothepoint | 21st Oct 21, 6:25pm 1634793937

"The spruiker is the most lowly thing there is."

In that case, the DGM are lower than lowly.

TTP

by MortgageBelt | 21st Oct 21, 4:29pm 1634786973

Interest rates were high and rising in 2007 2008 while house prices were also rising.

There is not a perfect correlation between rates and prices.

by DTRH | 21st Oct 21, 8:56pm 1634803017

That’s because house’s cost we’re around 75% less then. Interest on 1.2 million is a lot more than on 300 k

by rastus1 | 21st Oct 21, 1:46pm 1634777161

Those multiple mini granny flat type things popping up at 6 to a section with the $800k price tag might not look such a good specuvestment now.

About time the free money party was over.

by tulips | 21st Oct 21, 2:56pm 1634781361

That's basically every new build in Auckland. Yet the govt is pushing FHBs and investors towards these.

Terraced houses are going to be in oversupply pretty soon

by Albert2020 | 21st Oct 21, 1:50pm 1634777404

Interesting times. Brought an Auckland house 2 weeks ago, locked in rates back then and westpac have jumped rates twice in a matter of weeks.

by Clementé | 21st Oct 21, 2:53pm 1634781202

Where'd you bring it from ?

by Albert2020 | 21st Oct 21, 3:30pm 1634783425

sorry grammar police... with any luck I will be out on bail again a la Mr. Tamaki

by ikimpaul | 21st Oct 21, 1:51pm 1634777509

wow 2 rate rises by Westpac in a week- looks like you have to be really quick these days to lock-in your rate.Its hard to believe 12 months ago we were encouraging people to wait for rates to go down below 2%.

The average 1 year rate is now the highest since Covid-19 began ie since March 2020

by fortunr | 21st Oct 21, 3:00pm 1634781627

Still, this is just the beginning. The real fun is yet to start.

by MortgageBelt | 21st Oct 21, 1:57pm 1634777849

How does this compare to 1987?

Mortgages at 21%?

Now that's a real rate!

by Albert2020 | 21st Oct 21, 2:08pm 1634778538

Wasn't a problem when wage inflation matched it

by al123 | 21st Oct 21, 2:16pm 1634778998

OK, quick back of the envelope calculation. Assume average household income of 100k. In 1987, the average house price was between 2-3 times average hh income. Assume 3x. Now, they are about 8x average hh income.

To buy now with a 20% deposit, you would need to save at least 1.5 times the average household income. Which means today a mortgage of 650k. If the person buying in 1987 had done that, they would have a mortgage of 150k.

At 21%, a mortgage of 150k is less than a mortgage of 650k at 3%.

So I think it's time to stop with the myth that things were so much harder then. If two households saved the same percentage of their income for the same amount of time before buying a house, the 1987 household would still have been better off despite interest rates of 21% (which did not last very long, in any case).

by rastus1 | 21st Oct 21, 2:22pm 1634779328

...never mind that a 21% mortgage and a 3% mortgage just might change over 30 years.

And one might just go up and one just might go down.

by MortgageBelt | 21st Oct 21, 2:28pm 1634779726

Not propagating myths.

Just maths - 3 x 7 = 21.

So, mortgage rates have been 7 times higher before.

by al123 | 21st Oct 21, 2:34pm 1634780041

Fair enough - you're right with the maths! Usually when people make those kinds of comments though its because they are trying to push the 'it was so much harder back then' myth. Apologies if that wasn't your intention.

by Fluffybunny | 21st Oct 21, 2:46pm 1634780819

You cannot compare the two periods.

Fhb House ownership was significantly easier to achieve in the 80s.

Its not even close.

More to the point, leveraging yourself with debt back then has meant 20 years of credit induced growth as new players commit to ever increasing mortgages.

New buyers are now facing the risk of overshoot, is this the end of a long term credit cycle? There is no doubling every 7 years from here.

Not to mention new players now will have to wear the cost of climate action which are going to need to front up with shortly.

by Dale Smith | 21st Oct 21, 3:11pm 1634782296

Not at these median house income multiples they haven't.

by Carlos67 | 21st Oct 21, 3:16pm 1634782592

Average household income of $100k in 1987 your dreaming mate. I was on less than $10k a year.

by Zen20 | 21st Oct 21, 3:27pm 1634783222

Surely still dreaming in 2021?

by bw | 21st Oct 21, 3:32pm 1634783571

"Back in 1987 the average house price was NZ$88,900. The average pre-tax income was NZ$485.98 a week"

https://www.interest.co.nz/news/44330/opinion-why-golden-oldies-are-wro…

by refactornz | 21st Oct 21, 5:51pm 1634791876

So based on those numbers,

20% deposit : $17,780

80% mortgage: $71,120

Annual interest: 71,120 x 0.21 = $14,935

Annual pre-tax income: $25,270

So annual interest was 59% of pre-tax income. Maybe 100% of post-tax income.

by al123 | 21st Oct 21, 6:23pm 1634793789

Interestingly, if you use individual rather than household salaries, you get pretty much the same result.

A $71,720 mortgage at 21% for 30 years is $576 per fortnight. (Or 59.3 percent of the average wage).

I couldn't find the average, but the median weekly earnings are $1093. A $640k mortgage (based on house price of 800K and 20% deposit) is $1245 a fortnight at 3%, or 56.9 percent of the median weekly earnings. And it doesn't look like rates will be at 3% for long. As soon as rates go over about 3.35, it'll be a worse ratio than the 1987 one.

by al123 | 21st Oct 21, 4:09pm 1634785773

I think you misunderstood - I didn't say average household income was 100k in 1987. I used that number as a way to represent household income to house prices. (I.e., I'm pretty sure house prices weren't 300k in 1987 either - but they were 3x household income).

by Brock Landers | 21st Oct 21, 4:32pm 1634787159

Back when the missus had the luxury of staying home.

by rastus1 | 21st Oct 21, 4:40pm 1634787653

oh yes..the days when she would greet one at the door, freshly made up and groomed, pipe and slippers in hand, the smell of a home cooked dinner, fire going, drink poured, paper at hand and ready to massage the feet while one relaxed after a hard day down the mine.

What the hell went wrong?

by kiwikidsnz | 21st Oct 21, 4:30pm 1634787036

by Nzdan | 21st Oct 21, 3:24pm 1634783074

People these days are not complaining about the interest rate or serviceability. Just obtaining a mortgage is the biggest hurdle, with the deposit requirements, is the real gripe.

by streetwise | 21st Oct 21, 3:52pm 1634784756

I thought the share market was supposed to tank when term deposit interest rates increase. It looks like it's doing the opposite at this stage anyway.

by Yvil | 21st Oct 21, 3:54pm 1634784879

Patience, it most likely will

by streetwise | 21st Oct 21, 4:05pm 1634785503

Perhaps the usually nimble X-box-trained brokers were having an extended tea-break this afternoon.

by rastus1 | 21st Oct 21, 4:36pm 1634787379

The interest rate hikes are not yet high enough. So no reason to sell sound asset backed shares for depreciating cash in bank.

That said, time to hold some cash back.

by Yvil | 21st Oct 21, 3:53pm 1634784820

Repost of a reply to brisket who asked "how long the current rise in inflation will last?"

Yes it depends on how long higher inflation will last indeed. It's becoming clear that it's not as transitory as some thought. On the other hand I don't believe that inflation is about to return to its "long term average" because the current inflation is a result of 1) supply issues as you said and 2) monetary and fiscal stimulus, but current high inflation is NOT a result of amazing GDP growth. I believe that, when governments and central banks remove their stimuli, inflation will evaporate quite quickly, this will then lead on to lower interest rates again.

Since the GFC we have not fixed the economy at all, we have just made it "look good" with government and central bank interventions

by Brock Landers | 21st Oct 21, 4:31pm 1634787116

Higher inflation won't last because the RBNZ has a mandate to keep it within 1-3%.

The real question is how high must they raise rates to keep it there.

by bw | 21st Oct 21, 4:41pm 1634787716

When the Risk of doing business has been squeezed out of the price of money; interest rates, and into the price of art, cars, shares, Bitcoin and property etc. it doesn't mean that the risk has gone away - it means that those things now have all the risk that should have been reflected in the price of money in addition to the inherent risk always present in those items.

Now, as interest rates look to rise, the risk embedded in all things non-money is starting to become apparent.

Inflation, has already happened. It's embedded in most of the capital prices we see today. The CPI (for what it's worth) is just a last gasp of the process.

The risk, now, isn't that interest rates might rise per se, but that wholesale avoidance of risk takes hold everywhere else. And that means - wholesale liquidation of non-money assets, to try to ''get-out of risky assets" before returning risk to where it should have been all along.

Interesting times ahead of us.....

by Yvil | 21st Oct 21, 7:48pm 1634798918

Well said bw

by Uncle Bulgaria | 21st Oct 21, 7:42pm 1634798540

REINZ does everything it can to massage the numbers but I strongly suspect prices are already falling in most regions.

by CWBW | 21st Oct 21, 8:00pm 1634799637

The best time to buy is when everyone's fearful.

by Cheetahlegs66 | 21st Oct 21, 8:41pm 1634802072

Or just after everyone bails. Markets are like young guys in fast cars; when they loose control on corners they over correct. Im betting cash will be King in the next 12-24 months.

by Independent_Observer | 21st Oct 21, 8:48pm 1634802525

This market is more like boomers in a trainwreck.

by Bananafishbones | 22nd Oct 21, 4:49am 1634831394

That's one helluva load you're carrying on that shoulder.