TSB has come out swinging in its spring home loan campaign with a cut to its one year fixed home loan rate.
Its new rate is 4.69%. It's an offer than will run until September 30.
TSB has run a campaign to match the lowest offer of any of the big four Aussie banks and has done so for a few years now. But now it says it will beat those same banks' advertised fixed rate offers by 10 basis points.
These offers are for borrowers with at least 20% equity and who meet TSB's 'standard lending criteria'.
Now is the time when banks are trying to get noticed among borrowers. Even if the real estate market remains unusually quiet, rollovers and refinancing for prior years activity will be picking up now. Some banks are offering cash incentives, some low rates. TSB has obviously chosen the 'low rate' path.
And its 4.69% is now 46 basis points lower than the equivalent offers from ANZ, ASB and Westpac. And it is 26 basis points lower than either BNZ or Kiwibank.
It is even lower than any other challenger bank.
At the same time, TSB has increased its term deposit rates. Its new six month rate is 3.30% and its new one year rate is 4.10%. However these rates don't have the same 'market leading' feature their new one year fixed home loan rate does.
TSB is a depositor-funded bank, relying less on wholesale funding and wholesale markets than the main banks.
Recently wholesale swap rates have been rising, and on Thursday the one year swap rate rose another one basis point to 4.25%. That makes TSB's 4.69% offer remarkable in the context of the wholesale cost of money.
It would be an interesting conversation to ask a main bank to match this new TSB rate. Borrowers should always shop around.
Wholesale rates are still pushing higher and that is in response to high inflation impulses and the market expectations of US Federal Reserve moves. Another review by the Reserve Bank is coming in early October, and markets are now pricing slightly more than a 50 basis points rise in wholesale positioning.
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.
The next time we get a Consumers Price Index reading will be on October 18. That is now only about four 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 16, 2022 | % | % | % | % | % | % | % |
| ANZ | 5.15 | 5.15 | 5.35 | 5.45 | 5.69 | 6.85 | 6.95 |
 |
5.15 | 5.15 | 5.35 | 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 | 4.95 | 5.25 | 5.25 | 5.45 | 5.65 | 5.65 | |
| 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 | 5.19 | 5.24 | 5.44 | 5.64 | 5.64 |
| 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 | 4.69 -0.16 |
5.19 | 5.29 | 5.55 | 5.65 | 5.65 |
Also updated with changes by HSBC.
Fixed mortgage rates
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Daily swap rates
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Comprehensive Home Loan Calculator
13 Comments
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