Here we go. A major bank is raising home loan rates (and deposit rates), up from rates already high and equal to or above their main rivals.
ANZ has taken the plunge.
Now every rate ANZ has for a fixed term of one year and longer is the highest in the market
Their one year fixed rate is up 20 basis points to 3.85%. Their 18 month fixed rate is up 10 bps to 4.25%. No other rival has rates this high for these popular terms.
They will be hoping their rivals follow. But there is no guarantee of that.
Finding qualified borrowers is harder these days. The Credit Contracts and Consumer Finance Act (CCCFA) regulations are just the latest impediment. Buyers who qualify are now almost all good risks and very bankable. So being uncompetitive on a rate basis is a problem. But not if the other main lenders follow.
The other lenders will now feel less pressured to 'match' when the nation's largest mortgage lender is moving up.
And borrowers will be very keen to get the deal done, especially if the perception in the market is that rates are going up from here.
One thing the ANZ hike does is reduce the premium between one year and a two year term. And the one-to-three year term. These have reduced to +50 bps and +90 bps respectively from +70 bps and +110 bps previously. That may push more borrowers out to a two or three year fixed term.
But that is a problem for ANZ because other banks now have lower two and three year rates. ANZ is pushing them to ASB's -20 bps advantage and -6 bps advantage for those same comparisons. For the other three banks it is -0 bps and -6 bps, so the advantage for those others is negligible. ANZ will be hoping ASB moves up from its 4.15% two year offer.
But larger premium advantages will apply at most other banks, and TSB in particular. A potential ANZ one year customer may look at TSB for example and see that they can get a 4.35% rate for three years fixed if they are moving now. That is a whopping -40 bps advantage. And it is not as though the TSB rate is about to move up. TSB set that 4.35% three year rate today, with a surprising -29 bps reduction.
These changes come ahead of the Wednesday, February 23 Reserve Bank Monetary Policy Review, challenger banks are jostling their home loan rates too.
Earlier, SBS Bank has raised some home loan rates.
And TSB has lowered some, or in their case, lowered more of them because they cut one on February 3, 2022.
The SBS rises still pitch their one year rate below the main banks (and TSB). They are above TSB for a two year fixed contract but remain well below the main banks. They are above TSB for three year, but well below the main banks for this fixed term as well. For four and five years they have given up their market-leading positions.
TSB on the other hand looks like it is getting more aggressive with some key selected interest rate positions, although none are market-leading.
But neither have rate positions that challenge Heartland Bank's offers.
Hanging over the RBNZ review are what Omicron will do to New Zealand, and what Ukraine will do to the international financial markets.
But the overall shift up has been all about rising inflation.
Wholesale rates have been rising recently from these inflation expectation pressures, but they fell back somewhat today on global risk aversion related to the Ukraine crisis.
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 February 15, 2022 | % | % | % | % | % | % | % |
| ANZ | 4.10 +0.10 |
3.85 +0.20 |
4.25 +0.10 |
4.35 | 4.75 | 5.65 | 5.85 |
 |
4.19 | 3.65 | 4.09 | 4.15 | 4.69 | 4.95 | 5.19 |
 |
3.99 | 3.65 | 4.09 | 4.35 | 4.69 | 4.89 | 4.99 |
 |
4.19 | 3.69 | 4.35 | 4.69 | 4.99 | 5.15 | |
 |
4.19 | 3.69 | 4.09 | 4.35 | 4.69 | 4.79 | 4.95 |
| Bank of China | 3.49 | 3.49 | 3.69 | 3.99 | 4.45 | 4.65 | 4.85 |
| China Construction Bank | 3.65 | 3.65 | 3.85 | 4.35 | 4.65 | 4.95 | 5.05 |
| Co-operative Bank [*=FHB] | 3.39 | 3.29* | 4.05 | 4.15 | 4.55 | 4.89 | 4.99 |
| Heartland Bank | 3.25 | 3.79 | 4.15 | ||||
| HSBC | 3.94 | 3.49 | 3.94 | 4.15 | 4.54 | 4.74 | 4.99 |
| ICBC | 3.65 | 3.49 | 3.85 | 4.05 | 4.55 | 4.75 | 4.95 |
 |
3.79 | 3.55 +0.10 |
3.95 | 4.10 +0.11 |
4.55 +0.20 |
4.74 +0.15 |
4.95 +0.26 |
 |
3.60 | 3.60 | 3.90 -0.10 |
3.99 | 4.35 -0.29 |
4.74 | 4.90 |
Fixed mortgage rates
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33 Comments
Having an interest rate strategy, and sticking to through all economic conditions is the lens you should have, much like kiwisaver.
Making rash decisions based on your knowledge of what is contributing to market pricing will serve you poorly, as you know less than those setting the pricing.
I fixed for 5 years in December for the certainty. Sure, rates could drop and we end up paying extra mortgage interest which would suck but we've already budgeted for the payments.
But rates could also keep rising, and we haven't budgeted for an increase in interest payments. If rates keep going up, and we have wage inflation, then I'll have a 4 - 5 year head start and by refinance time I could find the debt has "deflated" by 20%.
Fixing short means every couple of years any income gains could be eroded as servicing costs are ratcheted up.
Yes need spending curbs to stop the price increase. Humans can't control their greed unless reined.
The culture of increasing profits every quarter have to be stopped or there is no future.
Rates should have been decreased, it's the people in power playing with the fickle mind of workers and peasants. They have the carrot and every rabbit jumped to grab and eat it. Now that carrot is stuck in their throat because it was too big for them. Whose fault is it?
So rates have to increase and few will have to pay the consequences of grabbing more than what they can chew.
You touch on an important topic Yvil. I often heard 'work life balance' which of course is a sentiment hard to argue against, but equally hard to achieve. Although some people achieve it by leaving it to others to pick up their slack and then call it working smarter 😠.
Business is hard, and if it's not hard that's just temporary. There is a shocking attrition rate in some industries so it is just a fact that key people have to work long hours to keep everyone in a job.
An older business owner I worked with had always worked many hours, hadn't burnt out, and was still on his first marriage. He said the key was to return home for the evening meal, and to treat his wife like a princess! A good strategy as many a business has sunk from not enough capital after a divorce settlement.
But aren't most companies doing that? At a time with huge inflationary pressures with the average consumer struggling, we pay more and more and how much of it is in fact simply sustaining unsustainable record profit growth. While the poor old kiwi punter is told to suck it up, companies are creaming it.
This Australian bank is the first to anyways increase rates. They don't really care about reputation as they reduced rates straight after none of their competitors increased. I think some regulatory watchdog needs to look at these thugs.
Bet there will be another record year of profits from ANZ (NZ subsidiary). I really hope customers look elsewhere for better deals and leave these thugs in droves.
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