Readers who follow our swap rate charts (below) will have noticed they rose again across the board yesterday and with another outsized gain.
But today, international markets have pushed through some very large bond yield retreats. So it seems likely that the current swap rate levels may represent the peak for a while.
Next week both the RBA (on Tuesday) and the RBNZ (on Wednesday) will push through more policy rate increases. Markets have priced in about +50 bps for both, pricing slightly less for Australia (+42 bps), slightly more for New Zealand (+52 bps).
Our 90 day bank bill rate is also up +52 bps from the last OCR change on August 17, 2022.
Banks have been raising fixed mortgage rates although not quite as aggressively as wholesale markets. These moves have been led by ANZ but not all others have followed, and if they have followed they have lagged by days or even more than a week. ANZ's latest rise was on Tuesday, September 20. Today both BNZ and Kiwibank have announced their changes following Westpac and ASB.
These delays open up competitive opportunities for borrowers.
In a rising market, moving early creates risk. Not only may others not follow, or not follow with as large an increase, but background market forces may turn or turn out different to the core assumptions. And all of those aspects are on display in the current spread of fixed home loan rate offers.
No doubt most banks will now wait for the signals that the RBNZ will give at its Monetary Policy Review on Wednesday. It is not a full MPS complete with a detailed analysis and press conference. Rather it is 'just' a review with only a press release. That means every word will be parsed against the prior settings as markets look for signals of a changed approach.
In advance of reading those tea leaves, BNZ today has made a point of restraining its two year fixed rate offer. It is now -16 bps lower than ANZ and ASB, and -6 bps lower than Westpac. And Kiwibank's rise leaves the BNZ carded offer -6 bps lower there too.
Probably of equal significance is that BNZ didn't move its three year rate. It is still at 5.69% and -26 bps lower than either ANZ or ASB, matching Kiwibank, and Westpac offers a rate -4 bps lower. These BNZ rates are now lower than the new 3 and 4 year Kiwibank offers, but not as low as the newish Westpac offers. Westpac has a decided advantage for longer fixed terms.
And the separation from challenger banks is now pretty large. TSB, SBS Bank, Coop Bank and particularly Heartland offer significant savings.
Across the whole main-bank market, a meaningful separation has opened up between ANZ/ASB on one hand, and BNZ/Kiwibank/Westpac on the other. In a home loan market where real estate activity isn't rising in a normal Spring surge and is now much more reliant on refinancing activity, this probably reflects the pressures and tensions of a cool market.
On the term deposit side, BNZ raised its term deposit rates offers two days ago, with rises from 90 days to two years that pretty much matched their rivals.
Kiwibank also raised its term deposit rates, and of note is their 4.20% one year rate, the highest of any main bank and also many challenger banks.
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 29, 2022 | % | % | % | % | % | % | % |
| ANZ | 5.50 | 5.45 | 5.65 | 5.75 | 5.95 | 6.85 | 6.95 |
 |
5.50 | 5.45 | 5.65 | 5.75 | 5.95 | 6.09 | 6.09 |
 |
5.35 +0.36 |
5.45 +0.30 |
5.55 +0.06 |
5.59 +0.20 |
5.69 | 5.89 | 5.99 |
 |
5.45 +0.35 |
5.39 +0.44 |
5.65 +0.20 |
5.89 +0.20 |
5.99 +0.14 |
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 | 5.39 | 5.54 | 5.59 | 5.79 | 5.89 | 5.99 |
| 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 |
Fixed mortgage rates
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10 Comments
I thought swaps/bonds may have peaked mid-year. With the one year around the 4% mark. But watching what is going on around the world right now, and our swaps going vertical again, right across 1-10 years, I don't know what is going to happen now.
The one year could be above 5% in the coming weeks which is starting to be a pretty big mismatch with the OCR.
Agree - it looks like the wheels are completely falling off.
I makes me laugh about the whole 'transitory inflation' narrative the Fed etc were trying to push last year. And as I said at the time, the reason they were saying this, was because they couldn't afford for it to be anything other than transitory.
The knew then, as they know now, that they can't fight the inflation because they've created too much debt to get through 2008 and 2020 without triggering a depression and reset of asset prices.
From the UK this morning:
So what the Bank of England has today tried to do, with these emergency purchases of gilts, is to drive up the price of gilts, to give time to the Liability Driven Investment Funds, to sell assets in a more orderly way, such that the re-pricing of the gilts doesn't lead to that markets bloodbath. LDI's have a gross value of roughly £1.5 trillion, of which a staggering £1 trillion has been invested in gilts and other bonds. These are largely leveraged funds, which means that when they buy gilts, they frequently use them as collateral to raise cash (in what's known as the Repo market), then use the cash to buy more gilts, then pledge the gilts again and buy more gilts etc. The BOE has just created £65bn in new money to buy 30 year gilts. That’s going to create more inflation, and it’s been caused by the current Government plan. Inflation will go higher and therefore so will interest rates.
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