ASB is the latest major bank to raise fixed home loan rates. They follow Westpac who moved some rates up yesterday - who in turn followed ANZ, and in this round were led by Kiwibank's limited move on May 30, 2022.
But with new mortgage application levels at unusually low levels, and the mortgage market now turning over essentially just with rollovers and refinancing, it is now a "protect your market share" game for banks, rather than a "grow market share" game.
And the new rates tend to reflect that, with offers for most terms settling down into very narrow bands.
BNZ is the laggard in this round, still with their changes unannounced. They will probably come very soon. And they too will probably settle at very similar levels of their main rivals.
A wild card in this environment is the 'cash back' incentives available. Kiwibank's recent expansion to a 1% offer for loans over $300,000 ups the ante from the previously accepted 0.7% cashback incentive level. Kiwibank also pushed out the maximum to $10,000. But they maintained tight claw-back conditions. Even so, Kiwibank's extension will draw their rivals into having to match them when pressed, and banks will work hard to find other margin-protecting strategies.
But generally, as Fitch noted yesterday, banks like periods of rising interest rates. This is when they should be able to build back margins. However, we should note that the RBNZ Dashboard data shows that overall bank NIMs (net interest margins) have not been declining. How much of that relates to their mortgage business is not revealed, but because all big banks are now essentially 'mortgage banks', you would have to assume that they have held their mortgage margins well. The big challenge now for banks is around 'volumes' of new transactions.
In the background, first it was the RBA, and overnight it was the ECB, either actually raising rates or signaling that their official policy rates are going up. Tonight, a high-side surprise from American CPI inflation may also drive upward wholesale rate pressures.
Our local wholesale swap rates (see chart below) have been trending up recently after they took a detour in the second half of May. They are back at those earlier levels and seem on track to push on higher.
Banks are also raising term deposit interest rates although not generally at the same pace as home loan rates. TD rate rises for the terms that Kiwis are comfortable using (6-12 months) are not rising as fast as for some other terms. We will have more on this in a separate analysis.
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 June 10, 2022 | % | % | % | % | % | % | % |
| ANZ | 4.95 | 4.85 | 5.15 | 5.35 | 5.65 | 6.35 | 6.45 |
 |
4.95 +0.46 |
4.85 +0.36 |
5.09 +0.24 |
5.35 +0.10 |
5.65 +0.10 |
6.35 | 6.45 |
 |
4.39 | 4.55 | 4.90 | 5.25 | 5.45 | 5.79 | 5.99 |
 |
5.10 | 4.85 | 5.19 | 5.39 | 5.55 | 5.79 | |
 |
4.85 +0.26 |
4.85 +0.36 |
5.09 +0.20 |
5.19 | 5.49 | 5.79 | 5.89 |
| Bank of China | 4.45 | 4.80 | 5.10 | 5.40 | 5.70 | 5.90 | |
| China Construction Bank | 4.35 | 4.45 | 4.85 | 5.19 | 5.45 | 6.15 | 6.35 |
| Co-operative Bank | 4.49 | 4.49 | 4.85 | 5.19 | 5.45 | 5.75 | 5.95 |
| Heartland Bank | 4.18 | 4.84 | 4.95 | ||||
| HSBC | 4.49 | 4.39 | 4.89 | 5.15 | 5.39 | 5.69 | 5.89 |
| ICBC | 4.39 | 4.29 | 4.79 | 5.09 | 5.35 | 5.65 | 5.89 |
 |
4.65 | 4.55 | 4.89 | 5.19 | 5.39 | 5.79 | 5.95 |
 |
4.45 | 4.34 | 4.90 | 4.99 | 5.35 | 5.55 | 5.75 |
Fixed mortgage rates
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Daily swap rates
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Comprehensive Home Loan Calculator
23 Comments
To quote the RBNZ "Monetary policy to maintain price stability as defined in the remit. The current remit requires us to keep inflation between 1 and 3% on average over the medium term, with a focus on keeping future average inflation near the 2% target midpoint and supporting maximum sustainable employment."
We have max employment. Inflation is charging at 7% thereabouts (probably more). There is another 5 Monetary Policy reviews this year. Lets assume its 50bp each time, that would put the OCR at 4.5% and still less than inflation. Would that be enough to slow inflation, or would we need more...?
so we have max employment, yet ~10% of the working age population is on some sort of main benefit..
https://www.1news.co.nz/2022/01/20/new-data-shows-drop-in-benefit-numbe…
Something does not compute.
Goes to show just how terrified of deflation that central bankers are...which is fair enough because in that instance the debt default happens very quickly.
At least compared to what we are now doing....its the slow and painful process of grinding the typical consumer in society into the dirt via the financial repression of severely negative real interest rates. In America...the savings are gone and now the typical consumer is trying to get by by loading up the credit card (which as seen record increases the past 2 months).
A slow, painful, death is apparently superior to a quick one according to the actions/philosophies of the modern central banker.
Yes, real interest rates are already tracking inflation, no matter the OCR. And although the numbers seem relatively small when compared to previous inflationary trends (70s & 80s) going from 2 point something to 4 point something is already double, and heading to 6 point something is basically treble where we've been.
Now many will say that where we've been has been la-la land & they have a point. However, we're heading north at quite some pace & my pick is that it will kill demand pretty quickly outside essentials, & is probably already doing so. Which is what RBs want. Kill demand, therefore kill inflation, therefore we can get back to something resembling normal sooner rather than later. Why do I think that will work? Just based on the shear weight of the debt in the global system already (unrepayable in my view) for all parties; govts, businesses, households & criminals alike, if interest rates get too high too quickly, then I believe we'll see the banking system itself in danger of... well, let's just call it the unthinkable for the moment. But... & I hope I'm wrong, it could get ugly.
Rates should never have been so low for so long. Debts are way past repayable.
The only real way forward is to up the rates, kill inflation so people can eat and heat their homes - BUT we need to let a lot of people, governments and businesses (zombies) go under. Its what recessions are for, and this one is LONG overdue.
It will be like Ireland in the 2000's - loans for governments from the world bank to bail out themselves and so they can bail their key banks. Then the long haul back to a sustainable economy.
The option to try and keep saving organisations, asset values, people etc that are overdebted will clearly fail sooner or later and the longer we prolong the inevitable the worse it will be
I'm a Kiwi with a young family who bought a home in the last five years. After the biggest run of central bank easing in history, we're suddenly now going to decide 'tough shit'? After those who came before us plundered something as basic as housing, as they did education and social welfare previously? The idea that we are considered 'zombies' due to trying to get be in economic circumstance not of our choosing and to be spoken of as so disposable is exactly why I'd expect to an uptick in departure gate stats, suicides or both. And for what, the crime of not being born a decade or two earlier?
Maybe it's time we started asking whether Superannuation, Working for Families, Accomodation Supplements and all these other things that are off limits as politically 'too big to fail' really are above question. If we are to be thrown to the wolves, then I hope my generation takes down everything and everyone with them.
But you could choose to sell your house, right?
Nobody is forcing you to own it. You are making a daily choice to be a homeowner, and to take the associated risks.
Nobody is throwing you to any wolves. You have choices. You chose not to list your house today. What will you choose tomorrow?
And, yes it sucks to rent with a family. But at least you have choices available to you that many do not.
Fitzgerald,
As someone in very similar position to GV I have a concern with your argument, while objectively true it does mean that suddenly there is a generation (maybe more) that has more incentive to leave than to stay. Once house is no longer owned then it becomes very easy to leave as have no major financial entaglments anymore.
Writing it out on a pro con list it is very much heading towards the only reason to stay in NZ is because that is where friends/family are. But as more people move somewhere else then suddenly that isn't even on the list anymore.... what is going to happen once all the net tax payers are gone?
End of the day, from an ethical perspective, what successive generations have done, and turned a blind eye to, especially in recent years, is very poor and should not be repeated in the future.
The stress involved for people in their 20's and 30's who think;
1. I load up with debt to buy a house and it could ruin me financially if interest rates rise and the house price drops dramatically, or
2. I wait on the sidelines and house prices don't fall and I'm stuck renting forever (and again I could be ruined financially by not being debt free at retirement).
These conditions should never have been allowed to happen.
But its been greed, self over others, incompetence and stupidity that has allowed this to happen - and its across the anglosphere. Not just a NZ thing. There are common traits to those who were born post WW2 who don't think it is their job to ensure social and financial stability for everyone - as they see the world through the lens of 'self' and not 'community'. And wonder why everything is falling apart around them. The Strauss-Howe theory of the 4th Turning explains all of this very nicely. Its in the fabric of those generations to create financial chaos and probably global instabiliy and war (because they didn't experience those things when they were younger and assume they will/would never happen in their lifetimes).
It's ironic when the Boomer generation trot out claims that younger generations are "entitled" and want everything handed to them on a platter.
And then go on to complain that the universal superannuation doesn't pay enough, that they can't use their gold card on peak public transport or the discriminatory "super gold" discounts are too low at the supermarket. All for a generation that's "worked hard all their life" which was filled with a myriad of tailwinds and supposedly have nothing to show for it today.
Looking at all the evidence, it would seem that the choices have changed a bit.
Nobody knows the future, everything is probabilities not certainties, etc, but surely now your main choices are:
• Buy/hold onto a house
• Pay rent for a while and watch house prices crater. Buy a house later.
You can't get away from risk, but the OP seems so certain that he's being "thrown to the wolves" that it seems rational to take action.
And live where? Rental houses in most cities in New Zealand are in very short supply.
I myself with a family and 3 children almost 2 years ago were trying to find a rental property in the Manawatu almost 2 years ago. We couldn’t get one. It seemed that landlord prepared to rent 4 bedroom homes to individuals rather than families, why? Because they could. Supply and demand and all. So we were force to buy a house at an over priced value to avoid living in a tent or our car. Why? Again supply and demand.
we do we have a shortage of houses? Because the people who we elect and who pretend to represent us let 1 million immigrants into the country in less than 2 decades and not build enough houses to house them.
So again, don’t blame an average person for the lack of housing options and affordability of them.
"then I believe we'll see the banking system itself in danger of... well, let's just call it the unthinkable for the moment"
Yip and I think one of the worlds most powerful bankers agrees with you.
JPMorgan CEO Jamie Dimon warns an economic 'hurricane' is coming (nypost.com)
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