Kiwibank is the next major to push through home loan rate increases, and while they matched ANZ and BNZ at the one year level, they are offering lower rates for all longer fixed terms in their new rate card.
For rates pf three years and longer the benefit is quite large.
This just leaves Westpac still offering 'yesterday's' rates, although that opportunity may close fairly soon.
The scale of this round of increases is substantial. They have been creeping up week by week and getting more frequent recently. But a longer term perspective gives the true scale of these changes. Virtually no-one buys a house for cash, they buy using leverage. The key metric is serviceability.
Two years ago (April 22, 2020) a 2-year fixed rate contract could be had for 3.39%. Rolling that over now for another 2-years fixed will incur a 5.25% rate (5.19% for Kiwibank). For a $450,000 home loan, that changes the monthly repayments by +$492. For most households, having to switch $492 every month from other disposable spending, or from saving, will be a shock.
Two years ago (April 22, 2021) a 1-year fixed rate contract could be had for 2.65%. Rolling that over now for another 1-year fixed will incur a 4.55% rate. For a $450,000 home loan, that changes the monthly repayments by +$480. So that will be a very similar shock as for the two year rate.
We may report incrementally rising rates, but anyone re-fixing now will bet the full brunt of it. Almost every borrower will make the adjustment successfully, finding the extra for the mortgage repayment. But the merchants who relied on the foregone disposable spend will really notice it. That money will no longer circulate in the economy.
So the analogy that 'inflation is a thief in your wallet' is a fair representation of what is happening.
Kiwibank raised term deposit rates at the same time. And yesterday BNZ came through with higher term deposit rates as well.
Update: TSB has raise home loan rates too. The table below includes these latest changes.
Since the beginning of March, wholesale swap rates have risen almost +90 bps. Since the beginning or April they are up more than +30 bps. And despite a hesitation on bond markets overnight, are not showing any sign of slowing down. Almost a full +50 bps is priced in to financial markets for the May RBNZ OCR rate review. Yesterday's undershoot in the CPI did not show any reduction in wholesale swap 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 April 22, 2022 | % | % | % | % | % | % | % |
| ANZ | 4.65 | 4.55 | 4.90 | 5.25 | 5.55 | 6.35 | 6.45 |
 |
4.49 | 4.49 | 4.85 | 5.25 | 5.55 | 6.35 | 6.45 |
 |
4.39 | 4.55 | 4.90 | 5.25 | 5.45 | 5.79 | 5.99 |
 |
4.80 +0.35 |
4.55 +0.36 |
5.19 +0.34 |
5.39 +0.40 |
5.55 +0.10 |
5.79 | |
 |
4.39 | 4.19 | 4.69 | 4.99 | 5.29 | 5.59 | 5.69 |
| Bank of China | 4.15 | 4.05 | 4.35 | 4.55 | 4.75 | 5.15 | 5.35 |
| China Construction Bank | 4.15 | 4.25 | 4.50 | 4.90 | 5.20 | 5.65 | 5.90 |
| Co-operative Bank [*=FHB] | 3.89 | 3.79* | 4.49 | 4.79 | 4.99 | 5.45 | 5.79 |
| Heartland Bank | 3.49 | 4.05 | 4.25 | ||||
| HSBC | 4.09 | 3.95 | 4.54 | 4.79 | 5.19 | 5.39 | 5.69 |
| ICBC | 4.15 | 3.99 | 4.35 | 4.50 | 4.85 | 5.05 | 5.25 |
 |
4.49 | 3.99 | 4.39 | 4.55 | 4.69 | 5.19 | 5.55 |
 |
4.19 +0.26 |
4.19 +0.24 |
4.69 +0.14 |
4.95 +0.10 |
5.29 +0.30 |
5.45 | 5.65 |
Fixed mortgage rates
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Comprehensive Home Loan Calculator
92 Comments
5-6% for debt is still below the long term average. If that level is making your bowels clench in fear then a) find more income b) cut discretionary costs, and if that dosent work c) sell at market before the bank does. Also VIP d) dont loose your job...
Netflix subs show the world is doing B in spades, and they share value was repriced accordingly. Down 37% in a single day, and traffic down over 60%.
Housing is repriced in slow motion when compared to stocks, but it does get there.
The long term average interest rate from a time when the amounts borrowed were a fraction of what they are now is basically irrelevant.
We'd collapse our discretionary spend well before we got anywhere near it simply due to the insane amounts involved in buying a house these days.
At that point, you don't really have any options and people start losing their jobs.
If 'market forces, lmao' was a credible argument, we would literally not be in this position in the first place. So there's that too.
The 'history of economics' also suggests that things like social cohesion start to plummet when you suddenly decide to just let people cop it after years of doing what you can to bake in higher levels of debt.
Yes I agree but you can only fool the market for so long....eventually 'market forces' win....see what is happening with inflation. Central banks tried to tell the market that inflation was transitory because they can't handle it not being transitory as it will destroy their credibility (if not already) and show that what they did in 2020 was in many respects insane...flooding a market that was already speculative with even more cheap money in order to prevent market forces from taking their natural course and clearing the bad debts built up in the system was simply just kicking the can down the road a bit further....in this instance it appears by about 2 years.
Thinking that the RBNZ can completely control the market would mean that we no longer live in a capitalist system, and we have in a short space of time transitioned into a completely centrally/state controlled economy - should we call ourselves communist now?
But what people often forget is that the majority of housing debt was originated prior to the last 12 months. So prudent loan holders would have kept their payments high over that time and may not experience a material increase in servicing costs (because they werent paying minimum).
Now, those who bought recently and/or left payments at minimum will feel the impact more.
Exactly. And people must understand that ALL asset classes are subject to market corrections, including housing. It is going to be a rude awakening for the delusional investors who think that housing is, for some magic reason, not subject to the same forces and laws of economy as the other asset classes.
Unemployment is still very low.
Well, for now it is.
It is well known that the economic effects of hiking the OCR lag quite significantly.
I predicted at the end of 2021 that unemployment will be at least 5% by the end of 2022, and I stand by that. I suspect it could be at least 7-8% by mid 2023 if the OCR is hiked to at least 3%.
you know... it doesn't really matter "in the long term"
let me explain (keep your bile)
We are bound to have unemployment at 97% soon or later in the future.
Do you believe in automation?
I had my share of AI and robotics and I can promise the most of human work will be obsolete quite soon. You would be surprised.
In the "long term" unemployment will be a meaningless word.
What we call UBI will be the only alternative to widespread misery.
Who you will sell your 10M house then? (generic you, not you you)
I am talking 15-30 years from now, depending on govts (yes, that is the real incognita, not technology, well not so much anyways)
I'm sure this hypothetical has not factored in the cost of producing and maintaining technology. In real work terms: labour, energy, materials. Much of what was done 20 years ago is now completely obsolete thanks to the internet. People still have jobs. Technology is booming, can't find enough workers.
Things evolve, yes. But what all those scifi movies that catch peoples imagination tend to leave out is the sheer amount of labour that goes into creating, maintaining, upgrading that world. Technology is not magic, it is also not easy.
ok... to put in context :D... how many horses there are on the roads today?
what if we compare it to 80 years ago?
The fact that progress is accelerating should not be in discussion I think, right?
Do you remember driving without google maps?
Or the world without internet?
Now we have IAs that drive cars, prepare dishes, make music, print buildings, simulate proteins.
Add CRISPR, cryptos, quantum computing to the mix
I am keen to bet my body parts on the fact that in 20 years the world like we see it today will make us thinking we were in a sort of prehistory.
Yes, I completely agree. I'm just not sure what part of any of that creates less work. The internet itself has created a metric bajillion jobs.
This website is a great example.
Who wrote this article? Who built this website? Who maintains this website? Who runs the ads? Who maintains the advertising algorithms? Who regulates comments and discussion? Who manages the website? Who builds the tools on this website, the calculators, the charts? Who maintains the third party technology used? Who maintains security and subscription services? Who runs the accounts?
Not all of these jobs are local and some may not pay a regular income, but the existence of this site has created thousands and thousands of hours of work. We've just come to expect that we type in a web address and the information exists instantly. To make that happen costs a lot of time.
Now, in the much more complex scenario where AI "runs" the world, how much work do you think it would take to make things instantly just happen for people?
More or less my point.
Once scarcity is not anymore, money doesn't make much sense (cause economy itself doesn't make much sense without scarcity)
That is utopian (at least for now)
But, to your point:
For some people being reach means to have enough
Some other people will never have enough even by having the most <= that is being miserable, rich and miserable
Probably because the market should have been allowed to correct years ago rather than being propped up with ever lower rates. That would have been far healthier a market correction.
Now they've blown the bubble far larger and the impacts of the correction look more dangerous.
To be fair Netflix just lost a load of customers in Russia and more importantly they have changed their model to not enable you to have multiple logins or devices anymore. They now have numerous other competitors in the market. My partner is about to dump Netfix, there is just not enough on it that's "New" anymore. Pretty much all downhill for them from here.
My strategy is to rotate through the services, immediately cancelling upon signing up (and stick to only one sign up a month to a streaming service). I don't understand why more people don't do this - it means that you don't keep paying for something you're not using, and if you do want to keep using that particular service for another month it takes very little effort to sign up again.
We bought our place August last year and locked rates in October. Here are the interest rates we locked in versus what they are today (Westpac):
1 year: 2.85 now 4.19
2 year: 3.25 now 4.99
3 year: 3.49 now 5.29
4 year: 3.99 now 5.59
5 year: 4.29 now 5.69
I'd be genuinely shocked if anybody paid, today, what we did last year, at these rates. Thankfully the majority of the mortgage is in the longer terms, and we both have high incomes, or I'd be sweating.
Or... the PMs and Finance Ministers who suddenly decided gentle house prices were better than meaningfully lowering prices once they were elected? Or the RBNZ who printed billions and left rates on the floor even as house prices took off? This isn't just people and shiny suits and flash watches, this is almost every institution in the country who was in on it.
Goes a long way to understanding how corrupt central banks, politicans and retail banks went in orchestrating the Japanesse bubble that burst....similar forces appear to be at play in NZ when successive governments have been elected to resolve the housing crisis, but once in power decide that its a good problem to have (or a world class problem if Adrian Orr)...we are no different.
I get your point (I guess?)
Most of the people that are going to be in trouble in the near future (or right now) are not to be considered "guilty"
So then... what?
Should the ones that could not afford (or that didn't want) to take that risk pay the bill to bail them out?
I don't think you would find that fair too.
I mean... the damage is done. Now what?
I am ok in pointing fingers in the right direction, like you. But then? It is impossible to avoid "collateral damage" now.
Hope people will think about it at the next election.. but if I see Nat or Lab going just over 10% each I will know (confirm) that people is stupid.
Is stupidity, over a certain line, not a colluded/guilty line of conduct?
All very good points.
I just lost a ton of money today in the stock market. My biggest loss ever in a single day.
There is no bail out for that. I don't expect anybody to feel sorry for me, or come rushing in with a bailout. I made choices and took risks.
It is exactly the same with the housing market. If you lose money, then that is on you. You make your choices, roll the dice, and should just live with the results.
The housing market has hardly crashed at all and I'm already sick of hearing all the sob stories.
For too long in NZ property owners have been seen as some kind of special class. More deserving than non-property owners, smarter than them, harder working than them. Heck I've even seen bigoted fool's on this site say that non property owners shouldn't even have children! Being a property owner dosen't make you "special". It shouldn't shield you from the risk that all us other plebs have to live with and manage every day.
There is a pretty big difference between housing and the stock market, though. Some kind of housing is an essential. Sure, buying a house is not an essential. But for the last 10-15 years, non home owners faced the forced choice of paying rapidly increasing rents on frequently substandard housing with insecure tenure, or paying through the nose for a house. What is more, they faced this choice in a situation where both major parties had a pattern of calling it a housing crisis while out of government, and then seemingly doing just about everything in their power to blow the bubble even bigger once they were in government. And until very recently, there was no reason to believe the government wouldn't just keep on favouring asset owners in this way. So I don't think it's fair to say that people who just bought a house to live in made bad choices - rather, they only had bad choices available to them.
Housing in NZ is a speculative investment.
Holding real estate while the OCR is at its lowest ever setting, and price-to-income ratios are at the highest ever levels is a speculative investment.
You knew that. You were quite happy to take the 30% per annum gains during the boom. Your posts used to be quite perky back then.
Anyone holding an asset that gains 30% in a year, but dosen't realize that it is a speculative investment needs their head read.
And yes, I understand the desire for a stable home. We all want that. Even renters who are locked out of home ownership want that. But if all that someone wanted was a stable home, then price falls shouldn't matter too much to them. They will still have a home, even if it is worth less. Let's be honest, many kiwi homeowners wanted a stable home AND capital gains. It is the sense of entitlement that Kiwis have with property, the idea that there is a "ladder" that will keep lifting them up, and "getting them ahead" once they are on it.
I didn't equate buying an house with buying stocks. But honestly I don't see too much difference.
Again, my question remain.
Then what?
Should we bail out the "victims", with also the money of the renters?
If that is not what you point, then what you suggest?
Govt money is MY money, I don't want it used for that, not again, not anymore.
Very few people bought a house. People entered into a contract with money lenders to borrow insane amounts of money and pledged to pay it back at whatever rates the money lenders decided suited them and only once all the money and interest was paid back would they really own the home.
Anyone who actually bought a house outright is absolutely fine.
Fast rises like this are going to have a big knockon house prices and relatively quickly so. Speaking with a REA friend hes saying many of his vendors are starting to panic. And you can see it even in the auctions - for example:
3 bed house in Kelston with a 790k Jun 2021 CV, that would have easily sold over 900k in November 21, sold for 682k today:
https://www.barfoot.co.nz/property/residential/waitakere-city/kelston/8…
Looks like a real gem.
Buyers looking in that price range should weigh up relocating somewhere more sunny for a few years.
https://www.realestate.com.au/buy/property-house-between-650000-700000-…
Madness comes in all forms. I'm watching the Bayleys Havelock North auction right now. A (desirable) lifestyle property on the edge of Havelock North homes.co.nz had listed at $1.84M in mid-March before the agent "revalued" it up to $2.35M in late March is currently under negotiation at $2.72M
Update: Sold for $2.76M. 237sqm house, 2500sqm land.
Other results:
- Commercial property, prime spot in the main car yard/takeaways part of Hastings, currently a busy seafood retailer but no lease mentioned so probably vacant possession. 1600sqm land, 260sqm building, lots of car parks. CV $1.43M, sold for $2.085M
- Lifestyle property 15km west of Hastings, 6Ha flat land, 190sqm house plus outbuildings, CV $900K, passed in after a single bid at $1.5M, or $100K below the homes.co.nz midpoint but 67% over 2021 CV. No agent revaluation evident.
Also, this is not a one off - heres a few more recent ones (estimates are based of oneroof today).
Titirangi, 1.06m estimate 940k ratable, 905k sold :
https://rwmtalbert.co.nz/auckland/titirangi/95-atkinson-road-mlb32011/?…
Western Heights estimate 1.54m, CV 1.4m, 1.04m sold:
https://www.bayleys.co.nz/1710431?fbclid=IwAR19NN482L3jtHeXn0Ei-v4_TeFK…
New Lynn Large 3 bed unit, estimate 890k, ratable 813k, sold for 693k:
https://harcourts.co.nz/Property/973015/HT220111/4-36-Copley-Street
Beach Haven 3 bed freehold house, 1.06m estimate, 990k CV, sold for 860k:
https://rwcarpenterrealty.co.nz/properties/sold-residential/north-shore…
Great anecdotes thanks.
The recent REINZ HPI showed Auckland prices down 8% from their November peak. I reckon the next one could easily show them down by at least 12%. Let's see how accurate I am on this one, I said down by 7-8% before the last HPI was released. I'm refining my model all the time.
Of course, there will be plenty of sales that are not nearly as bad as the ones you have highlighted, to balance things out.
You do realise that these are exactly the type of properties FHBs will be going for? In fact half of them are better than the typical FHB home. The Kelston house is more likely for the typical fhb couple. They were absolutely desirable when the market was going bonkers some months back.
Not to mention that this is comparing it to estimates (which often used to be too low) and CVs. They won't fetch $2m but they should fetch at least around their 2021 Jun CV if the market was even remotely healthy.
Also since when is having a decent school next to you not desirable?
You are a bit out of touch.
These are exactly the type of properties I would expect to not fetch a premiun, there's no surprise - the markets slowed after all. The Titirangi property needs work aswell - you have to sink some money into it - so is 900k a bad sale price?
Where are desirable properties selling for large discounts?
Desirable properties tend to be bigger, nicer homes in better suburbs and correspondingly have higher estimates and CVs.
The properties I listed above are selling much lower than their respective estimates/CVs.
Don't know how else to put it. I am not saying desirable 250sqm character homes in Mt Eden are selling very cheaply - in fact, large Mt Eden type properties are far less relevant because they are a minority compared to the typical 100sqm 3 bed Auckland house - i.e. what I have posted above.
You could have the same dwelling in Titirangi, on a much nicer street that would attract good interest...
These are the sort of properties that are going to suffer in a slow market. If you're a FHB you've now got more options, you can now be more picky. No one wants to live on a busy main road if they don't have too.
Unfortunately only one of those sold before 2022 in recent history. The New Lynn one sold in Nov 2020 for 663k and now sold for 693k. Only about 5% gain, actually what it should have been in a sane world. It does appear to have missed out on all last year's gains and is likely to have sold for more if marketed in October 2021.
Could be a canary! All last year's gains goneburger.
Change in management in RBNZ is giving good suggestions to Orr, and I hope the rate will keep rising till the inflation drop to RBNZ mandate (1.5).
OCR is still at emergency level 1.5% clearly by looks of it. It's good we are not taking knee-jerk action to raise it by 1 or 0.75 BPS.
Push 0.50 for the next 3 interest rate announcements till we touch at least OCR at 3.
We had a very good run on interest rates post-financial crisis, now it's time to normalise. I only wish RBNZ had started this process when the inflation rate got above 3% to avoid the risk of financially shocking the economy, right now they need to climb a cliff to catch inflation.
I remember someone telling me the amount of money you could borrow indicated how successful you were. For example if no one would lend you the money to buy a second hand car you weren't very successful however if a bank would lend you several million to buy a mansion you were successful.
Women may well have chosen husbands on the amount they could borrow. This only works in a stable interest rate environment. In a rapidly rising interest rate world you can go from hero to zero pretty quickly.
Some people, no doubt, were put under a lot of emotional pressure to borrow more. To put your foot down and refuse to borrow more when the bank was offering it would have looked cowardly not so long ago. To worry about increased costs in the future would have you coming across as paranoid or anxious.
I remember googling, "what do you do if your partner insists on you borrowing more money than you want to" to try and find a solution for the dilemma. I did not find any answers. Fortunately the bank offering less than I thought they would and then Labour introducing new interest deductibility laws on the day the mortgage broker visited saved me from falling into the trap.
I had sorted out my affairs prior to COVID hitting and had thought at the time I had dodged a bullet only to be severely embarrassed by subsequent house price rises. Looking back I don't think I would change anything now. Peace of mind is actually worth a lot to me in my advancing years.
This statement is very apt for very few of us "Peace of mind is actually worth a lot to me in my advancing years."
But Kiwi mentality and what people shared with me in past in the last few years as financial advice is "to make money in NZ, you have to take as much debt as you CAN (not afford)". If this is a general perception in public to maximize the debt then there will be a lot of people in trouble once the interest rate touches 7%. One more thing which is very important to mention any policy change or interest rate change will impact after 4 to 6 months, there is never be an immediate impact on current mortgage holders (with multiple properties).
Now investors specifically are sitting tight and waiting for National to come in next election so that tax deductibility will be gone and if that happens, investors will again continue on the journey of the property price increase and big capital gains.
I'm a bit skeptical that rate increases are going to wreck the economy. Discretionary spending will be down yes, but that's already happened or has been happening in the past two years. Outside of FHBs in the past couple years it might not affect the overall economy as much.
Inflation is going to be with us for the next couple years so hang on tight.
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