Not to be left behind, ASB is the next major bank to raise home loan rates (according to their website changes this morning).
HSBC has as well.
They won't be the last with a global rush underway to raise policy rates which is likely to kick our local wholesale money costs sharply higher later today. Don't be surprised if both BNZ and Kiwibank push through their hiking versions either later today or early next week.
ASB has chosen to match ANZ's new high benchmarks across the board.
At this point, the result is that places TSB's current offers are among the 'best' available at present.
TSB's one year rate is now -69 bps lower than ANZ, ASB or Westpac. It is -30 bps lower than Kiwibank.
They also have good advantages for rates of 18 month to three years as well.
And for four years, their advantage over ANZ is a massive -120 bps, over a five year term it is a -130 bps advantage.
Compared with ASB these two longer term advantages are -44 bps for each term. Less, but still considerable.
How long such big differences last isn't known (by us), but they are sure to close up when TSB makes its next rate change.
We had wondered whether ANZ was being too aggressive with its rate hikes earlier in the week. But the US Fed and the wholesale money markets have 'justified' their moves that seemed out-sized at the time.
It is easy to see rates across the curve above 6% soon if the market momentum continues. Remember, a year ago, one year fixed rates were at 2.60% at ANZ and two year rates at 2.99% at ANZ. Two years ago the two year rate was 2.69% at ANZ. Borrowers who took out a two year fixed rate two years ago face home loan interest rate that have more than doubled.
And the trend hasn't stopped. We will be watching the data to see if there is a rush to fix at longer terms to "avoid future pain" and "lock in certainty". Certainly three year fixed rates are much more popular now.
On the term deposit side, ASB also raised rates, and have outdone ANZ marginally. ASB's now six month offer is 3.45 (ANZ and Kiwibank are at 3.35%), their new nine month rate is 3.70% (ANZ is 3.65%, Kiwibank 3.55%) and their new one year rate offer is 4.10% matching others.
One useful way to make sense of the 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 September 23, 2022 | % | % | % | % | % | % | % |
| ANZ | 5.50 | 5.45 | 5.65 | 5.75 | 5.95 | 6.85 | 6.95 |
 |
5.50 +0.35 |
5.45 +0.30 |
5.65 +0.30 |
5.75 +0.30 |
5.95 +0.26 |
6.09 +0.30 |
6.09 +0.30 |
 |
4.99 | 5.15 | 5.49 | 5.39 | 5.69 | 5.89 | 5.99 |
 |
5.45 | 4.95 | 5.45 | 5.69 | 5.89 | 5.99 | |
 |
5.35 | 5.45 | 5.55 | 5.65 | 5.65 | 5.75 | 5.75 |
| Bank of China | 4.95 | 5.15 | 5.25 | 5.45 | 5.65 | 5.65 | |
| China Construction Bank | 5.50 | 5.45 | 5.65 | 5.75 | 5.95 | 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 | 5.29 +0.25 |
5.39 +0.30 |
5.54 +0.35 |
5.59 +0.35 |
5.79 +0.35 |
5.89 +0.25 |
5.99 +0.35 |
| ICBC | 4.99 | 4.95 | 5.15 | 5.25 | 5.69 | 5.89 | 5.99 |
 |
4.95 | 4.89 | 5.35 | 5.29 | 5.49 | 5.79 | 5.79 |
 |
4.89 | 4.69 | 5.19 | 5.29 | 5.55 | 5.65 | 5.65 |
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81 Comments
The 2008 crisis was truncated with tens of trillions of dollars of currency swaps, money printing, and rate cuts coordinated by central banks around the world.
This current crisis, is now beyond the scope of central banks to contain because they have failed to normalise either interest rates or their balance sheets since 2008.
Central banks will be unable to pull another rabbit out of the hat; they are all out of rabbits..
It was caused by banks giving loans to people who couldn't afford to repay them. All bank lending involves money creation and by the banks themselves and not central banks. Banks don't lend out their reserves of government currency.
https://www.hks.harvard.edu/sites/default/files/centers/mrcbg/programs/…
I imagine the image of the speeding train is alluding to an upcoming train wreck, if so, I wholeheartedly agree. I can only reiterate what I said multiple times before; 2023 is going to be a mess, especially in NZ. Some disagree but I'd be happy to wager a beer or a bottle of champagne that NZ will be in recession in 2023
Not that I disagree on your prediction. Though I Do have a Questions that I don't have answers for.
What does it matter if We have a recession, if for the last say 2 years, we had a period of artificial growth that was on paper only. Data currently says asset prices are retreating, so sure we are all poorer on paper, though we are all still gainful employeed. And business activities arnt exactly crashing to a halt aside from real estate (and that was overdue).
What does a retreat in on paper gdp matter if we all have access to employment?
I'm wondering if we are underestimating the asset price retreat, whilst over estimating it's affect on overall employment.
Trouble is many won’t have access to employment soon. Rising mortgage repayments will leave a lot less disposable income. Jobs will be lost in retail. Falling house prices and rising building costs will hit construction sector, losing more jobs. And so it will continue through 23 and likely 24. Mortgagee sales will be a certainty
The tourists and the farmers will keep nz afloat.
The students are striking for the climate this afternoon and the teachers are in support. The irony being it is a Friday before a long weekend
They want half the number of cows but did not say anything about half the number of flights. Duh of course not as that would affect them and their self interest.
Whether its climate or interest rates we are doomed and the rb will go back to printing.
the question i would ask is how will you measure and how will it be defined ? the current measures may not reflect the mood and financial realities of individuals in the historical way that recessions have been charactarictarised in teh past.
Take unemployment --- we know that there are masses and masses of jobs available -- and hard working people who lose one job for example -- will simply take another opportunity - -in healthcare for example there may be as many as 20,000 vacancies across all professions including support workers - in IT another 5,000 -- and who knows how many in agriculture and hospitality -- so i think we are a long way off seeing unemployment numbers rising significantly -- ergo wages will keep inflating
If its GDP -- again hard to see how this will drop to trigger the technical definition -- given we are starting down increased immigration again , heaps of opportunities to increase productivity and outputs if we can fill vacancies -- and the inflation impact on current spend on fuel and food - not to mention all imported goods which also come with the doubly whammy of the dropping like a stone kiwi$
I agree there will be massive pain --- but not sure how its goign to be measured ?
It doesn't matter whether this tightening is right or wrong, we must surely all know in our hearts that it has a long way to run?
Just like Putin, Powell cannot afford to lose. It's only a matter of what winning looks like. We can acquiesce, or they will take their Pyrrhic victory.
Not a chance, even though ACC will be managing this system (they have the fundamental payment system already in place which can be utilised), the level of work required to get the system up and running is far too much to rush through, starting with the legislation to be drafted, revised, approved etc.
As the saying goes it is a recession as long as it does not touches you but if does than it is a depression.
This recession could be depression for many and is all because Mr Orr's LEAST REGRET policy. In doing, went overboard, even that was fine but went for a considerable long period denying the data that was yelling from rooftop that do not follow Fed as USA being Big and diversify economy may still survive but for a tiny nation like NZ , it could be worse but he did follow fed as it suited his narrative wich also suited politicians in power as were winning hearts by distribution of free money one and all.
Now also, people in power are more worried about house price than food and of other essential - need leaders not politicians. House price except specualtors percentage effecting will be low - only in paper but yes so called investors (Speculators) will be and should be as is part of casino.
well the great depression of almost 100 years ago lasted circa 10 years and a whole generation or two learnt that you earn money before you spend it
My grandparents certainly never forgot the experience and they only hung onto their farm by telling the bank manager they were not moving.
What a bunch of DGM's.
...coupled with a settling of mortgage interest rates and a slow but definite easing in credit restrictions (the two things which caused the current downturn) and there’s reason to be cautiously optimistic about where the market is headed (A Church).
I'd be having sleepless nights by now if I were him. I assume he has a portfolio, but regardless, it's not about 'what's happening here' that matters.
"Property can't fall! Look at the cost of building materials" etc. Right?
If we get a severe Recession, all asset prices are going to get trashed - including the cost of building materials.
And I find it hard to believe that building materials have increased in cost solely due to their manufacturing input costs.
If existing house prices increase 30% in a year, would the people in charge of price quality at Winstone Wallboards just sit on their hands and say "well our material, Labour and freight costs have only gone up 10% so that's all our wholesale price needs to go up by"?
We will be watching the data to see if there is a rush to fix at longer terms to "avoid future pain" and "lock in certainty"
I'm sure many will, but I say it's a mistake. (I know I'm in the minority to think so). Look at the compression or narrow spread between short term and long term rates, the 1 year- 5 year spread is 0.64% for ASB, at Westpac it's only 0.30%. This is a clear signal to fix short, lock in 3 to 5 years for certainly, OK, but you will be paying more when the whole thing falls over in 2023 and interest rates collapse back down to almost nothing. The world has not solved its high debt and low productivity problems, not at government level, not at company levels, not at private levels. We simply cannot afford the high interest rates which, don't forget, take 12 - 18 months to filter through to the economy. Most still don't understand this delay.
"when the whole thing falls over in 2023 and interest rates collapse back down to almost nothing"
Could be.
But where do you reckon prices will be when that happens? What we see today is unlikely to be it. And for rates to be back at 0%, there'll be perhaps 40% left of what we currently have? It's not the "return on our money (or the cost in the case of debt) but the return of it" - to trample a well overused metaphor.
Perhaps forget refinancing, and get out all together, and stick some of it away that's now guaranteed by the Government?
If rates do fall in 2023 it will probably be in Q4 and very progressively (i.e. at a much slower pace than the hikes we've seen in the past 12 months). Interest rates collapsing to almost nothing? I don't see any sign of that being possible, but who knows, nobody saw covid coming.
You're right about the narrow spread, you don't gain much by going long at the moment. I don't agree that mortgage rates will be falling back any time soon, though.
The OCR might come back a bit, and that will temper domestic rates to a certain degree. But mortgage rates are largely determined by global markets, and markets will not accept low returns in a world where risk is high, which is the world we're rapidly moving into.
People with large amounts of debt are going to have to accept that holding that debt will be a lot more expensive moving forward.
Are you talking about residential property in NZ, or about bitcoin. I think you might be right about one of them, the other.. maybe.
But then again, I don't really care about or use "real" dollars when looking at housing, the mortgage debt and the price I could sell the house for are in nominal dollars, so high inflation eating away the "real" value isn't a problem, its a blessing, assuming of course our incomes keep up with inflation.
I’m a bit less optimistic. Once inflation takes root via wage increases it can be very stubborn. So I don’t see meaningful rate cuts (mortgage, not ocr) before end of 2023. And by the time Nats get in the horse has bolted so far nobody knows where to look for it. I’m going for 40-50% peak to trough fall in 2021 NZD (already passed 25-30% in USD) with falls flattening Q1 24 followed by a few years of flat prices.
Historically rates are still low, the problem is the amount of debt compared to income and the fact that people have purchased houses at way inflated price’s, anyone who has purchased in last 8 years could find themselves in negative equity before this downturn is completed.
Prices going back to what they were 8 years ago? Hmmm, that will kill housebuilding dead. Our place would by your theory be worth ~$450k. That wouldn't cover the cost of getting services to a section upgraded to what the councils now demand and building a very basic house, let alone any cost for buying the land.
Seems pretty damn unlikely unless we see builders wages and costs going backwards for a while.
The way house price’s have been pumped up the last few years a 50% will be minimum drop over next couple of years. Rates will not be dropped to emergency level again NZD has already tanked around 15% this year this will keep inflation high. You are correct about new builds many developers will go insolvent putting more pressure on price’s $450k is around the total average wage couple can afford and this is where the market will find stability.
yeah DTRH when rates fall from 9% to 7.5% was positive but when they were 2.5% and will soon be 7.5% - it is concerning as many streched in herd mentailty under FOMO (also prompted and supported by RBNZ and media, who gave platforform to likes to Tont A and others to create - just like warmongering is bad FOMOmongering should be on same line and held to accountable but alas.....).
https://www.stuff.co.nz/business/124895427/mortgage-broker-squirrel-off…
I wonder how the 5%ers are going?? A lot of these fixed rates will have rolled over.
In the latest he again referenced the "peak" of interest rates in June.
I guess technically he was correct, there was a small peak for a period of time. If we consider the economists forecasting a peak of 4.75% for this cycle - you can put the start and end of the cycle wherever you'd like, if there is a momentary decrease from 4.75% before the rate goes higher still, then huzzah! They were right all along. Make a new forecast, get money, get paid.
Very Soon in next round of upward movement will see 7 infront of interest rates.
Why be surprised as are in world where fundamentals have taken over and even if local poiliticians or reserve bank tries to manipulate are unable to. Infact the more they try to help the more.
Infact more they try to interven (Help in their world as they did earlier by printing and distibutiong free and easy money for sustain period of time) more the noose will tightens and squeeze.
Inevitable : Will get worse before getting better and it cannot be avoided, earlier everyone faces the consequences of reserve bank and government action during pandemic (generosity in extreme), better it will be.
... option 3 is that he is corrupt. And will burn us all with more inflation and currency devaluation than is neccessary, just to help his vested interest mates in banking & property.
The great Tane Orr Mahuta, with his head high up in the canopy. Perhaps he couldn't give a toss about the little underlings on the forest floor.
I used to think our central bankers were partially corrupt as their decisions benefited asset owners, over non-asset owners. But I've changed my tune that they simply don't completely understand what they are doing.
All we can do is "Forgive them for they know not what they do"
If I " know not what they do " at my work as much as Orr does at his I'd be out on my Gummy butt quicker than you can say " Forgive me , boss " ...
... our nation's rowing team would break all world records if their oars were as teflon coated as the Reserve Bank's ...
Have you worked in a government/state agency before?
Competence isn't high on the list of important characteristics. He/she who is willing to destroy their own character in order to have power and control over others is. When this happens, the game being played turns into 'who is the best at being the worst'.
So knowing what you are doing and how it impacts people in the real world isn't important when the goal is power and control.
US treasury yields jumping at a fairly impressive speed.
The two year now looks as though it might eclipse pre-GFC levels (ie what was enough to cause chaos when we had far less debt in the system).
US2Y: 4.118% UNCH (UNCH) (cnbc.com)
One year similar but perhaps not quite as severe.
US1Y: 4.081% UNCH (UNCH) (cnbc.com)
It looks possible that we've turned the corner on the 40 year bond bull market and that has huge systemic implications for asset pricing.
Was just looking at the TLT bond fund (20 + year treasury ETF) and its dropped 40-50% in trading price as a result of the interest rate rises. This could be indicative for what is coming next for all longer duration assets (like mortgaged property) as the increased cost of capital/discount rate flows through to other asset valuations.
iShares 20+ Year Treasury Bond ETF (TLT) Stock Price, News, Quote & History - Yahoo Finance
I don't know why people just don't leave. I moved and retired to Thailand, brought a condo here, food, drink, going out is cheap, Condos are great to live in. Sanctions are the number one reason why kiwis are now suffering, energy prices are surging, and this believe that Russia caused this is idiotic. It was the sanctions that have caused energy prices to skyrocket and a manipulated economy where the property market was turned into a Ponzi scheme. Labor has done nothing but to create woke leftist policies, create fear, tension and violence and indirectly promote an idea that white men are bad. The Gender pay gap is good example, stats NZ shows the formula for this doesn't take into account Occupation, Education or preferences. Using such a ridiculous formula allows for the idea that woman are oppressed in the work place but really it's a power grab, or put another way, maybe I can say be skeptical about woman in positions of power, did they really earn it. If Nats win, ACT and NATs leaders own 10 homes between them, about 85% of NATs ministers own multiple property investments so they will flood the country with immigrants and try pump the market again. NZ is also turning into a police state by design but also because of failing policies and people are getting angry. Far better to just leave.
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