BNZ, TSB and ASB hike home loan rates

Personal Finance / news

More banks jump on the fixed mortgage rate rise bandwagon as background wholesale rates push up both locally and internationally

22nd Oct 21, 9:08am by David Chaston

Update: They are coming fast now. ASB has now advised new rates too (after we first published this article). They are in the table below.

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More banks are "adjusting" their fixed home loan rates higher.

We now have notifications from BNZ and TSB.

BNZ has pushed its boat out as far as Westpac did on Thursday, matching or topping ANZ's fixed rates for the hotly competitive 1-2 year rate set.

BNZ's increases range from +25 basis points to +50 bps.

On the other hand, TSB has been much more restrained with its fixed rate increases, rising only +16 bps or +20 bps, and leaving its sub-4% rates unchanged for the 4 and 5 year fixed terms.

TSB still has a sub-3% rate (6 months at 2.89%), and still no rates over 4%.

We are awaiting key rate announcements from ASB and Kiwibank, and they will no doubt come soon.

In the meantime, both banks have rates that are unusually lower than their main rivals, for a short time at least.

(Across the office, ASB did announce term deposit rate increases that range from +5 bps to +40 bps.)

On Thursday, wholesale swap rates rose again, especially at the long end. We not only have the swap pressure on at the short end from New Zealand influences (RBNZ, CPI), but we also have real pressure on at the long end from international rates. In fact, a bull flattening is underway Friday - where short end rates rise faster than long end 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 22, 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
	3.85 +0.30	3.25 +0.26	3.59 +0.30	3.75 +0.30	3.99 +0.30	4.35 +0.36	4.65 +0.36
	3.89 +0.34	3.24 +0.25	3.54 +0.25	3.79 +0.34	3.99 +0.30	4.49 +0.50	4.49 +0.50
	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	2.94 +0.20	3.20 +0.16	3.40 +0.20	3.64 +0.20	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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37 Comments

by dictator | 22nd Oct 21, 9:31am 1634848280

The economic collapse of China is really setting off a domino effect.

by Miguel | 22nd Oct 21, 10:12am 1634850741

30% of China's GDP is the construction sector. China already has a huge oversupply of residential housing. Prices and debt levels are very high. This is a massive risk, particularly to smaller economies reliant on trade with China.

Definitely one to watch.

by Yvil | 22nd Oct 21, 11:20am 1634854856

How do you connect China's economy to the rise in NZ banks interest rates?

by dictator | 22nd Oct 21, 11:44am 1634856282

It's the fear in the bond market putting pressure on swaps. If there weren't so many regular defaults on interest payments it wouldn't be such an issue. As the swaps get more expensive the banks aren't going to set themselves up to lose money.

by Wuhan ER | 22nd Oct 21, 4:40pm 1634874002

You're dead right.

by brisket | 22nd Oct 21, 11:36am 1634855760

This is nothing to do with China. It's global interest rates being pushed up by inflation.

Which is not to say that the (potential) collapse of their real estate sector won't affect us, when it happens...

by dictator | 22nd Oct 21, 11:46am 1634856391

Look at the origin of the inflation. China is roughly 20% of global trade and they are having, or creating, many issues for the cost of energy and production inputs.

by ikimpaul | 22nd Oct 21, 9:35am 1634848539

The Big 4 are all up a full 1% since July.

The 1year interest rate is back to the same rate offered in March 2020 and the entire 2020 OCR reduction is now gone.

Let's see if the "housing market commentators" are right - housing is rising because of record low interest rates. So theconverse must be true- housing prices should now return to what they were pre covid.

by sharetrader | 22nd Oct 21, 9:39am 1634848768

they wont drop much as people wont sell for less than they paid unless forced too, the number of sales will decrease as listings get taken off therefore the supply of listings will hold prices stable or at a slow decline for awhile

by tulips | 22nd Oct 21, 9:56am 1634849762

The economics of holding an existing property is vastly different from 12 months ago.

Interest deductibility phased out, interest costs up 50%, increasing costs of Healthy Homes and additional tenant rights who can make any reasonable changes to your property and can't be kicked out...

The list goes on, many mum and dad property investors will be exiting the market as this isn't what they signed up for, rental income won't cover their interest costs, and capital gains are likely to be minimal over the next 2-3 years. That being said, the economists could be wrong on this one as well, property prices could spike up or down, but it's a gamble I wouldn't want to bet on.

by printer8 | 22nd Oct 21, 10:23am 1634851436

tuplis

Nah.

No need to feel sorry for investors.

My millennial son bought an investment property in a regional centre 2 to 3 years ago. Value up 60%, rents already up 15%, equity vs principal considerably improved, tax on interest doesn’t fully kick in for another thee (?) years . . . not in the least bit worried as expects rents will have reduced principal considerably and will have paid it off in six years.

P.S. No help from bank of Mum and Dad

by tulips | 22nd Oct 21, 10:28am 1634851713

Good on him, which regional centre did he buy in?

If it's the likes of Gisborne, it may be smart to exit while he's ahead and lock in those gains.

He has been incredibly lucky with his timing hence he is in a much different position to someone buying into the market now.

by Final Account | 22nd Oct 21, 12:10pm 1634857852

My advice would be let inflation eat away your mortgage whilst you make minimal payments and enjoy bumping up the rent.

Collect money from the bank and the tenants at once.

by printer8 | 22nd Oct 21, 1:31pm 1634862691

Tupils

Yes Gisborne - great CG there over the past couple of years.

After Auckland he is enjoying the relaxed lifestyle environment (great surf and beach) and affordable housing. Fortunately he is in a line of work where wages are similar to those nationally.

As to future for housing there is a shortage and have read a report that the shortage is going to take some years to address* so prices are expected to remain relatively firm. However whatever happens to the the local market that is secondary as to what happens to rents.

What seems to be the determinate is when he decides to move for lifestyle reasons . . . it is a good environment for young kids as is Hawkes Bay.

Something there for those struggling to meet Auckland house prices and traffic congestion.

Cheers

* on the basis of estimated shortage, population growth and current new supply it could take longer than the national average.

by tulips | 22nd Oct 21, 1:46pm 1634863595

I thought so and that's a great situation to be in for your son- he's done well for a millennial.

Having said that, looking at where Gisborne real estate prices are at currently, I have seen some analysis that prices are 10-30% overvalued relative to the rest of the country currently. Auckland wouldn't be far off those prices.

If your son plans to live there long term, then the prices don't matter as long as he continues to pay his mortgage.

From an investing perspective, it may be better off being a value investor, taking his profits from Gisborne and buying somewhere where he can get better yield and better value.

Plenty to think about but glad he is on the right track.

by Brock Landers | 22nd Oct 21, 10:09am 1634850563

Can anybody spot the glaring fallacy in this statement?

Here's a clue, at what discount on today's pricing would the average seller actually be selling for less than they paid however many years ago?

by theglc | 22nd Oct 21, 10:52am 1634853141

exactly!

by Pragmatist | 22nd Oct 21, 11:30am 1634855438

I mean there is zero chance they will mentally anchor on any other value they might have encountered along the way, like rates CV, or homes/oneroof/corelogic estimate on their banking app instead of purchase price from 4 years ago..

by ikimpaul | 22nd Oct 21, 10:29am 1634851768

but what happens if you are getting a divorce, or moving cities/regions or your family member has died and you have inherited the property, or you lose your job

by Notgreedykiwi | 22nd Oct 21, 10:11am 1634850681

Housing will keep on increasing until banks keep on giving money out. Everyone in NZ just wants to make money on their equity. Everyone wants do get rich at the time of influx and at someone else's cost. They all want to buy to sell at a later date and become a millionaire. And we have been repeatedly told by peers, mortgage consultants and media that debt is a good thing. Is it? If everyone makes money from houses without doing hard work or any development, who pays?

by chebbo | 22nd Oct 21, 9:56am 1634849794

Interesting to read the old comments from the swap rates page:

by bigblue | 19th Jan 16, 11:32am

Swap rates plummet - looks like they will soon be at the lowest level seen since 2009 - likely they will plunge to a new record low. The banks should soon be offering 1 and 2 year mortgages at around 3.5% and 3 year mortgages at 3.75%. Current mortgage rates in the mid 4% area are far too high - negotiate hard with your bank!

When this was written, 2y swaps were at 2.7%.

by Brock Landers | 22nd Oct 21, 10:07am 1634850476

I'm hearing whispers about an unusually high level of auction pass-ins.

by ikimpaul | 22nd Oct 21, 10:25am 1634851500

how high is unusually high

by lowercase capitalist | 22nd Oct 21, 10:29am 1634851750

Anything higher than usual.

by tomjones_04 | 22nd Oct 21, 10:38am 1634852298

Comedy gold! Best comment ever

by Pragmatist | 22nd Oct 21, 10:48am 1634852912

21 out of 38 (55%) sold at B&T yesterday, doesn't seem that far off normal?

And 63% at Wednesdays sessions. Seems pretty good considering Akl are still in level 3.36744 or whatever it currently is.

by Zachary Smith | 22nd Oct 21, 10:56am 1634853378

On Thursday there were 16 out of 38 passed in whereas the Thursday before had 3 out of 11 passed in at B&T Auckland Central rooms. Far too small numbers and too early to tell of course but...enough to start a rumour.

by Pragmatist | 22nd Oct 21, 11:11am 1634854266

Indeed, if your objective is starting/propagating rumours..

by rastus1 | 22nd Oct 21, 10:58am 1634853508

With the management of the covid shambles and external events......how long before unemployment rises?

More downward pressure on housing to come.

This is going to get ugly.

by HouseMouse | 22nd Oct 21, 12:09pm 1634857768

Yep. And the covid shambles and related growing unemployment is one of the key reasons the OCR won't be increased that much.

Another reason is that once the OCR gets to 1% it's going to start killing the development sector, with resulting job losses etc.

So the feedback loops kick in.

But then what do I know, everyone here and all the economists are saying the OCR will be more than 1.5 % in a year!

I don't think I have heard one person agree with me, so maybe I am the weirdo.

by rastus1 | 22nd Oct 21, 12:23pm 1634858617

I wouldn't dismiss your view. It seems they can't hike rates to control inflation - an alternative, tighten up on credit.

Would that work instead?

by Sam B | 22nd Oct 21, 7:13pm 1634883217

I think it might play out that way.

But I don't think they'll be able to keep rates down if global inflation persists, even if those rates are causing unemployment. We don't really know how the RB will juggle those mandates if it comes to that, or whether the global inflation will continue. But I believe that serious inflation and a weak NZ dollar would be a real political shock. It is very very unfamiliar territory, people will freak out.

by AJ123 | 22nd Oct 21, 11:22am 1634854977

RBNZ please copy paste

by ikimpaul | 22nd Oct 21, 12:19pm 1634858390

For speculators - the time to sell is NOW - i base this purely on the fact that

Ashley Church this morning is having a whinge about the RBNZ this morning and how he fears for NZ's Economic Stability.

https://www.oneroof.co.nz/news/40362

All of which is code (by Ashley) for the Housing Market is looking shaky and the growth is about to reverse.

by Essen | 22nd Oct 21, 9:20pm 1634890813

Tony Alexander is openly suggesting that the time has come for people to reconsider their financial goals and whether they have "enough". For many, he argues, now may be the time to sell, lock in gains (whether that be real estate or crypto) and then prepare to protect wealth rather than try to grow it.

by Brutus Iscariot | 22nd Oct 21, 6:37pm 1634881063

Short end rates rising faster than long term rates is bear flattening, not bull flattening.

by S.Creditor | 22nd Oct 21, 11:01pm 1634896904

Just a reminder folks, that banks don't lend money people deposit with them, nor do they lend the money they get in by borrowing from the Reserve Bank or other banks. Those funds all go into reserves, which are enormous at the moment. They don't need more reserves. Banks create the money they lend. That money creation becomes more deposits. They are simply profiteering from these rises in rates that they blame on "funding costs'. https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/20…