Following recent wholesale rate movements, ANZ has dropped the interest rate on its two-year fixed home loan special by 35 basis points to 5.45% from 5.80%.
The cut is effective from today, Tuesday, July 5.
The effect of this 'surprise' reduction is that the ANZ two-year 'special' is now 24 basis points lower than all its main rivals, except for ASB where it's 35 basis points lower.
The next Reserve Bank Official Cash Rate review is on Wednesday, July 13 - in eight days time - and markets have priced in a 50 basis points rise to 2.50%. But international wholesale rates are sliding, and local wholesale swap rates are falling in sympathy.
In fact the two year swap rate was 3.80% at the end of May, rose to 4.56% by the middle of June, and has now fallen back to 3.80% at the end of trading Monday.
At the end of May, ANZ's two-year fixed home loan 'special' was 5.25% and then rose to 5.35% in mid June, rising again to 5.80% in late June.
So today's sharp 35 basis points reduction doesn't actually take it back to those late May levels. They still remain 20 basis points higher after all these shifts.
To be fair, it isn't clear where all these changes are about to settle. But the very recent trend is sharply lower from two weeks ago.
An ANZ spokesperson said: "While wholesale rates remain volatile and the Official Cash Rate is expected to continue to rise, where there is an opportunity we will pass savings onto customers. Interest rates will continue to be reviewed in response to international and local market conditions."
'Local market conditions' are sharply weaker. Real estate market activity is unusually low, especially in the large Auckland market, and that is spreading nationwide.
So banks are left with the embedded refinance market to fight over to hold or grow their market share. Defending will become the immediate priority, so this move lower for such a key rate will undoubtedly see a response from its main rivals. ASB is the most exposed right at this point.
Today's reduction by ANZ isn't the first home loan rate reduction recently (Co-operative Bank trimmed some long rates recently), but it is the most important, and will be market-moving.
Update: Both Westpac and BNZ have now responded. Westpac is matching ANZ with a -24 bps reduction. BNZ has gone lower, down -30 bps to 5.39% for two years fixed.
A lot will depend on how international wholesale markets react when Wall Street re-opens tomorrow, and their view of the chances of the US moving towards a dip in economic activity - and how the US Fed will react to that and the threat high inflation poses. The policy balance between the two, and the market perceptions of them, will be crucial, and those will play out over the next few weeks until the Thursday, July 28 US Fed meeting (NZT).
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 July 5, 2022 | % | % | % | % | % | % | % |
| ANZ | 5.35 | 5.35 | 5.65 | 5.45 -0.35 |
5.99 | 6.85 | 6.95 |
 |
5.35 | 5.35 | 5.65 | 5.80 | 5.99 | 6.85 | 6.95 |
 |
4.99 | 5.35 | 5.59 | 5.39 -0.30 |
5.99 | 6.09 | 6.19 |
 |
5.45 | 5.19 | 5.69 | 5.89 | 6.05 | 6.29 | |
 |
5.35 | 5.35 | 5.59 | 5.45 -0.24 |
5.99 | 6.29 | 6.39 |
| Bank of China | 4.99 | 5.39 | 5.49 | 5.80 | 6.05 | 6.15 | |
| China Construction Bank | 5.35 | 5.35 | 5.65 | 5.80 | 5.99 | 6.85 | 6.85 |
| Co-operative Bank | 5.09 | 5.09 | 5.49 | 5.69 | 5.89 | 6.19 | 6.29 |
| Heartland Bank | 4.90 | 5.29 | 5.59 | ||||
| HSBC | 5.29 | 5.19 | 5.55 | 5.69 | 5.89 | 6.59 | 6.69 |
| ICBC | 4.39 | 4.45 | 4.85 | 5.09 | 5.45 | 5.69 | 5.89 |
 |
4.95 | 5.15 | 5.35 | 5.59 | 5.69 | 6.09 | 6.25 |
 |
4.85 | 4.85 | 5.35 | 5.35 | 5.65 | 5.89 | 5.99 |
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18 Comments
please don't bullshit me with statistics. This is because the ANZ want to pressure Adrian Mole to refrain to increase the OCR by 50bps next week. So that the interest loans are cheaper. remember , we have $150 billion worth of mortgage rollovers and double that next year. So it's either
listen to the banks because they're too big to "fail"? or
Grow some balls and hike base rates because we don't want to go bust like Turkey et al...
You don't need to be an economist to see the fundamentals. If the banks succeed then we will see a 25 rate hike and know exactly where we stand in terms of the economy. but it will be a slow death.
Yes, it seems somewhat anomalous given it's now lower than their 18 month rate (and they're the only bank in that state). Are they perhaps a bit over-exposed to more risky loans (in terms of LVR) than they'd like, and are hoping to get some from other banks as people come to refix? Might be a bit hard to do business if they get stuck holding a portfolio dropping both in value and LVR.
Just reminds me that the easy way to tell which finance companies are in trouble to to watch their advertising rate - not that I'm suggesting ANZ is in trouble yet, but perhaps they're forecasting to be.
AMI fell over because they got took on way too much risk, got too big and were too exposed - perhaps ANZ are heading that way also?
Someone's been lending at massive DTIs - be interesting to see the breakdown by bank.
[I note this is farting in the wind - reading lots into a single rate move].
Haven't they also all stopped lending to LVR < 20%?
I'm thinking it's more about the potential for trouble, rather than actual trouble (given the banks very risk averse nature). Their biggest risk is house prices falling - and interest rate drops may not stop that.
A lot of people are coming up to refix, and all the banks want a piece of that action.
And I could be totally wrong, and I'm okay with that. History will tell ^^.
Yeah. Right. Bolton. 🙄
Here he is in January, saying that future OCR rises were already "priced in" to mortgage rates.
https://www.rnz.co.nz/news/business/460387/mortgage-broker-says-most-ho…
How much have mortgage rates risen since January? The average 1 year fixed rate is up about 1.5% since January, the average 2 year fixed is up about 1.2% since January.
Anyone listening to Bolton has been repeatedly misled and misdirected over a long time period.
Someone posted on here last week about the low deposit, high interest rate, loans that Bolton has been pushing. Anyone who took one of those loans will be in a horrible trap right now.
Bolton is a wolf in squirrels clothing.
Inflation is still rising rapidly here and globally. RBNZ needs to get the NZ dollar up and prices down (quickly).
Only one way to do that because of the delay effect of our ocr change on the market. So I reckon the banks are more worried rbnz would look for a .75-1 hike instead of what everyone has priced in.
The NZD may be falling due to our OCR having been hiked too aggressively into a falling housing market, this spells doom for the NZ economy, hence the NZD falls.
The way to correct this could be by lowering the OCR, to allow for the housing market to be stabilised and to avoid a deflationary collapse with a banking crisis and widespread insolvencies.
Further OCR hikes this year will drive us into economic depression. This is because our economy is overindebted and housing market-dependent.
The consumer price inflation is a result of our government throwing around COVID support, ultra-low OCR rates up to 2021, a supply shock coming from overseas. The inflation cannot be contained via OCR hikes, the best bet would be to allow inflation to devalue our massive debt over several years, THEN hike the OCR.
If we'd been measuring inflation properly, instead of hiding it by ignoring the asset bubbles, we wouldn't be in this mess - the OCR would never have gotten as low as it did if we'd noted that there was ~10% inflation in such a large chunk of our collective spending!
You can't say on the one hand, that inflation has been caused (or helped) by the ultra-low OCR, then claim raising OCR won't effect inflation.
It would be really obvious it has a significant effect, if we were measuring inflation properly. The problem is this would make asset bubbles largely intolerable, which is not in the interests of those spruiking said bubbles.
I think it's just the banks having a quick dip into the market and picking the eyes out of anyone new or looking to swap banks before they lock their books down again. And stopping any good clients from switching.
They will be looking for people that have great security etc., upping the quality of their total lending book by weighted averaging.
It's just a game they are playing between themselves.
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