Fixed mortgage rates below 5% are the next benchmark to become increasingly rare.
Today (Thursday), ASB has raised their one year and eighteen month fixed rates. This mirrors a recent Westpac rise, and these two banks are the first two to have no rates under 5%. It is something we haven't seen since June 2015.
Update: ANZ has made the same fixed rate changes.
Today's change by ASB and ANZ weren't large, and ASB matched them by even smaller rises in two short term deposit rates.
But these small and repeated moves add to a developing trend where the rate curves are flattening as they rise.
Given we are entering the spring real estate selling season, rising mortgage interest rates are unusual. This is often the time of the year when rates become their most competitive, and fall. But sales volumes in the housing market remain very low and the mortgage market is now dominated by refinancing activity. The general market uncertainty by borrowers probably makes it easier for banks to hold on to existing customers who may be nervous about exposing their finances if they go out to seek an alternative bank. A conservative outlook by borrowers creates the conditions for banks to enhance margins marginally.
But for those borrowers with strong enough financials, now is probably a good time to shop around. Banks will have fewer opportunities to nab market share and they will take them enthusiastically. The re-emergence of cash and non-cash incentives is testament, some of which cap out for as much as $20,000.
A check of the swap rates at the bottom of this article shows we have been in a period of steadily rising wholesale rates that started at the beginning of August. This is a trend that was been driven by global forces, especially the US Federal Reserve. Bond markets have come to accept that the Fed's will, will prevail here until the back of inflation is broken. It may take a long time.
The next Fed review is on September 22, NZ time, and financial markets are coming to accept that another 75 basis points rise is a live possibility. That means wholesale rates will face upward pressure even if the US faces growth challenges. The Fed has clearly signaled they are prepared to pay an economic growth price to get inflation back under control. If they don't their market cred will be shot.
And for New Zealand, that means we won't be able to avoid those upward pressures.
They next time we get a Consumers Price Index reading will be on October 18. That is now only five weeks away. The best-case scenario is that inflation may have peaked in September with petrol prices having topped out. But the labour market remains tight, the NZ dollar is depreciating, and imported inflation shows no sign of abating. You would be brave to assume the September CPI will be significantly less than the June rate of 7.3%, so no relief in that department is on the horizon.
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 although break fees should be minimal in a rising market, they will start to bite in a falling 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 September 8, 2022 | % | % | % | % | % | % | % |
| ANZ | 5.15 | 5.15 +0.16 |
5.35 +0.06 |
5.45 | 5.69 | 6.85 | 6.95 |
 |
5.15 | 5.15 +0.16 |
5.35 +0.06 |
5.45 | 5.69 | 5.79 | 5.79 |
 |
4.99 | 4.95 | 5.49 | 5.39 | 5.69 | 5.89 | 5.99 |
 |
5.45 | 4.95 | 5.45 | 5.69 | 5.89 | 5.99 | |
 |
5.05 | 5.15 | 5.35 | 5.45 | 5.65 | 5.75 | 5.75 |
| Bank of China | 4.85 | 5.09 | 5.19 | 5.39 | 5.59 | 5.59 | |
| China Construction Bank | 4.99 | 5.15 | 5.29 | 5.45 | 5.69 | 6.85 | 6.85 |
| Co-operative Bank [*FHB special] | 4.89 | 4.79* | 5.39 | 5.39 | 5.69 | 5.79 | 5.89 |
| Heartland Bank | 4.79 | 5.15 | 5.14 | ||||
| HSBC | 5.04 | 5.09 +0.20 |
5.19 +0.10 |
5.24 +0.10 |
5.44 +0.05 |
5.64 -0.45 |
5.64 -0.55 |
| ICBC | 4.99 | 4.79 | 5.15 | 5.15 | 5.69 | 5.89 | 5.99 |
 |
4.95 | 4.89 | 5.35 | 5.29 | 5.49 | 5.79 | 5.79 |
 |
4.89 | 4.85 | 5.19 | 5.29 | 5.55 | 5.65 | 5.65 |
Also updated with changes by HSBC.
Fixed mortgage rates
Select chart tabs
Daily swap rates
Select chart tabs
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.