Westpac joins ANZ with much higher home loan rates

Personal Finance / analysis

Fixed home loan rate rises are spreading with another major mortgage lender pushing through big increases. But in the background the causes are rising even further, meaning this won't end soon

[updated]

20th Oct 22, 3:51pm by David Chaston

Westpac is the next major bank to shift fixed home loan rates up sharply.

They follow Wednesday's lead from ANZ.

Although they match ANZ for terms 12, 18 and 24 months, they now have a lower card for longer terms.

Westpac has also raised its term deposit offers at the same time, basically adding +20 bps across the board from 5 months and longer. Their new six month rate is 3.70% and their new 12 month TD rate is now 4.40%.

Update: TSB has also raised fixed mortgage rates today, but nowhere near as aggressively as the main banks and leaving them with a substantial advantage over those that have already moved. But one feature of the TSB change is that it signals the end of any home loan rate offers below 5%

The sharp rises in home loan rates come as wholesale markets push higher. Locally the impetus was from the unexpectedly high September CPI number. But the real impetus is coming from global benchmark rates. The US Treasury 10 year yield rose sharply again today and it doesn't seem to be finished.

Bond markets are essentially judging that central banks haven't moved up fast enough or high enough to snuff out inflation yet. They are betting much more will be needed. And that applies to the RBNZ as well. Just a few weeks ago we though a +50 bps hike was a lot. Then suddenly a +75 bps possibility joining the conversation seriously. Maybe even more is on the table when the RBNZ next reviews the OCR on November 23, one that will have to carry them through to February 2023.

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 October 20, 2022	%	%	%	%	%	%	%

ANZ	6.05 +0.55	5.99 +0.54	6.09 +0.44	6.19 +0.44	6.29 +0.34	7.19 +0.34	7.29 +0.34
	5.50	5.45	5.65	5.75	5.95	6.09	6.09
	5.49	5.45	5.59	5.69	5.89	5.99	5.99
	5.45	5.39		5.65	5.89	5.99	5.99
	5.99 +0.54	5.99 +0.54	6.09 +0.44	6.19 +0.44	6.19 +0.44	6.29 +0.44	6.29 +0.44

Bank of China		5.25	5.35	5.45	5.65	5.85	5.85
China Construction Bank	5.50	5.65	5.65	5.95	5.95	6.85	6.85
Co-operative Bank [*FHB special]	5.35	5.25*	5.65	5.75	5.95	6.09	6.09
Heartland Bank		5.09		5.45	5.49
HSBC	5.29	5.39	5.54	5.59	5.79	5.89	5.99
ICBC	5.35	5.25	5.35	5.45	5.69	5.89	5.99
	5.29	5.29	5.45	5.49	5.75	5.79	5.79
	5.25	5.19 +0.20	5.49 +0.04	5.59 +0.10	5.65 +0.06	5.75	5.75

Fixed mortgage rates

Select chart tabs

Source: interest.co.nz

Source:

Daily swap rates

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Source: NZFMA

Comprehensive Mortgage Calculator

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43 Comments

by tulips | 20th Oct 22, 4:05pm 1666235124

The Prophet's Scroll is unravelling.

by Future | 20th Oct 22, 4:16pm 1666235793

7% Interest Rates This Year, Guaranteed !

10% Interest Rates Next Year, Guaranteed !

Rates are going 7 and Up.

https://www.youtube.com/watch?v=z2o9vQwcDa8

by fortunr | 21st Oct 22, 9:20am 1666297247

I personally think that 10% is excessive, but I would very comfortably bet on 8% by end of next year.

by Carinaz | 20th Oct 22, 6:29pm 1666243745

One part interest rate 7% but 30% ???

by Future | 21st Oct 22, 8:41am 1666294905

Getting there.

Within Auckland, six of the seven territorial authorities had annual price decreases, with the North Shore’s the largest at 28.6% (to $949,000).

Prices were down annually in seven of the region’s eight territorial authorities, but South Wairarapa’s dropped the most with a 27.5% fall (to $700,000).

https://www.stuff.co.nz/life-style/homed/real-estate/130137138/house-prices-inch-up-between-august-and-september-real-estate-institute-data-shows

by Juzz | 20th Oct 22, 4:05pm 1666235125

I can see Westpac's increases, but not the new rates. Is it just me?

by Snow | 20th Oct 22, 4:31pm 1666236680

Same for me. Has happened before.

by Fitzgerald | 20th Oct 22, 4:09pm 1666235391

The RBNZ is not in control of any of this.

Anyone who still thinks that the RBNZ can control mortgage rates via the OCR is going to have an unpleasant surprise in 2022/23.

by Pa1nter | 20th Oct 22, 4:17pm 1666235877

The RBNZ controls things the same way the Police control burglaries, or the Fire Service prevents fires getting started.

by Carinaz | 20th Oct 22, 6:37pm 1666244242

Agree.

No more manipulation as economy fundamental has taken over.

Mr Orr is moving OCR ( Though not as much as should) as is forced.

by fortunr | 21st Oct 22, 9:18am 1666297139

Economic fundamentals are finally reasserting themselves. It is going to be very painful for specufestors, with houses losing a big chunck of their values and returning to levels more sustainable and sensical, and interest rates reaching levels not seen in many years.

Time to pay the piper. Time to acknowledge that the fools' paradise of ultra-loose monetary settings is finished, once and for all. Time to rebalance the economy away from parasitic housing speculation and into the real productive economy. Time for many people to find a real job.

by Albert2020 | 20th Oct 22, 4:17pm 1666235853

Man ANZ are really isolated in their 4 and 5 year terms aren't they

by Future | 20th Oct 22, 4:35pm 1666236947

Think of the incredible risk they are taking on. The others will catch up, if they survive !

by Gibgibgib | 20th Oct 22, 10:45pm 1666259157

They have much better long term rates, they just don't advertise them for some reason

by Brock Landers | 20th Oct 22, 4:28pm 1666236522

🚀🚀🚀🚀🚀

by Pa1nter | 20th Oct 22, 8:35pm 1666251303

I was heading towards the door already, but thought there'd be at least another cycle or two worth hanging around for.

SpaceX could have a good future.

by Albert2020 | 20th Oct 22, 4:57pm 1666238253

Anyone have any mortgage experience with TSB? They seem to be consistently offering the best rates bar Heartland

by Black and White | 20th Oct 22, 5:17pm 1666239472

Been doing business with TSB for 30 years plus.

By far the best bank in this country.

Banking for purpose not profit.

Not like the greedy Australian banks.

by Nifty1 | 20th Oct 22, 5:44pm 1666241042

Banking for purpose not profit

Lol there's a Tui billboard right there...

by lastlegs | 21st Oct 22, 9:35am 1666298138

have to give them credit for breaking through the 5% ceiling for 5 year TDs.

by dunnock | 21st Oct 22, 12:26pm 1666308380

my current dilemma is whether to put some money into long dated TDs now or put it on 6 months and see what rates are doing next april?

by keenaucklandobserver | 21st Oct 22, 9:55am 1666299307

I giggled at this "Banking for purpose not profit."

And then spat out my coffee when you finished this off "Not like the greedy Australian banks."

This is like RBNZ saying that they thought they did a good job raising the OCR early and was "ahead of the curve".

by theoutlawtorn | 20th Oct 22, 6:55pm 1666245339

We went to TSB last year. So far so good...

I especially like the fact that it's a NZ bank.

by phalanax | 20th Oct 22, 5:04pm 1666238646

The problem banks have is they have bet the house on the house . This will restrain their ability to endlessly hike. The RB will not be keen on breaking the banks either . Pinch of salt , some of the inflation about is transitory and will fall back regardless of any OCR setting... it takes time for inflation to settle ,its not just a matter of setting a rate and watching the temp gauge drop like in a car.... bottom line is finding the correct settings wont be easy but it really is a matter of tread lightly...too heavy and it all goes down one dark hole rather quickly for all and sundry. So dont be so quick to tear into Mr Orr or the folk at the RB ... they didnt make you go buy a house... their conservativism is probably keeping the big bad Wolf from your door. Be careful what you wish for....

by RickStrauss | 20th Oct 22, 5:08pm 1666238905

And we've already seen the RBNZ massively subsidising the Aussie banks, to the tune of - what - $9 billion at recent count? Of course, as ASB CEO Vittoria Shortt says, it's an "investment in New Zealand" not a handout to banks.

If things really go pear-shaped I wonder if we'll see Aussie banks threatening the government as happened in Cyprus, and the taxpayer being made to stump up to bail the banks out a la Ireland too. If so, I'd hope we have politicians with more the courage of those in Iceland, who made ensured banks bore the consequences of their risky behaviour too. Nationalise those who need a bailout? It would really just be taxpayers getting a little more for their money.

by Tin Pot Tony | 21st Oct 22, 6:51am 1666288273

People misunderstand. The banks wont need bailing out - they got 20% to 40% deposits. This time it's not the GFC for banks it's for certain people.

by keenaucklandobserver | 21st Oct 22, 9:58am 1666299483

20% deposits won't be sufficient at this stage, especially for those mortgages doled out in the last couple of years.

40% deposits also won't be sufficient when you consider that investors have been tapping into their equity and potentially bringing their owner-occupied properties below the 20% level.

You can bet that there are some very nervous bankers in those banks working out their risk exposure and portfolio - I've had some of those high-level discussions.

by Independent_Observer | 20th Oct 22, 5:11pm 1666239096

1-2 year swaps are up nearly 100 bps in the past month. Must be some interesting conversations going on in the banks as they look to balance their loan book against interest rate risk.

by Carinaz | 20th Oct 22, 6:31pm 1666243897

When was the last time When house prices were falling and interest are rising.

Whenever till now whenever house price started falling, interest rate too started falling to support / stopthefall.

by Squishy | 20th Oct 22, 8:07pm 1666249649

At 7 or 8% we must be getting close to the lowest test rates lenders used to assess mortgages when rates where low. That's when I would expect rates to really start to make a dent in CPI.

by gnx | 20th Oct 22, 8:27pm 1666250861

I would love to see how our test rates compare with the world

i think we are half a percent less than Aussie…. Must be our rugby prowess that makes us lower risk

by Nifty1 | 20th Oct 22, 8:37pm 1666251454

Many banks test rates in 2020/2021 were 6%+/-... You're probably only now looking at test rates 8%+/-

by 7jai | 20th Oct 22, 8:20pm 1666250420

It's funny how banks can move interest rates from super high, to super low, and then to super high in a span of a year or so.

How is this sustainable growth for the people? In a few years, once everything has crashed, they will start lowering interest rates (once again) to record lows. I wish the government has a bit more common sense. But I guess all governments are like this!

-7

by Juzz | 20th Oct 22, 8:33pm 1666251216

They haven't been super high since 1990 and even then that was alot less than in 1988.

by Speedmax | 21st Oct 22, 2:31am 1666272676

Bank offered me 19.75% when buying my first house in 1987. Current rates are still relatively low. In theory they could go up a lot further, but in practice probably won’t go past about 9-10% because of too many defaults

by Fitzgerald | 21st Oct 22, 7:25am 1666290301

First home buyers in England are being offered 10% mortgages right now.

by Future | 21st Oct 22, 8:48am 1666295327

Father Fitzgerald - Its starting to happen.

10% Interest Rates Next Year, Guaranteed ! ( Here in NZ )

by interesting1234 | 21st Oct 22, 9:00am 1666296013

19.75% seems crazy, however the DTI was only around 3x the average salary back then vs sometimes 10x currently in places such as Auckland. It was still reasonable to be able to afford a mortgage at ~20% when you could fund this on one income over time and still have children.

by pankers | 20th Oct 22, 8:51pm 1666252294

Bring back 21% interest rates and 18% in the bank that really tested people when they came mortgage free with 5 years

by Mr Pink | 20th Oct 22, 8:56pm 1666252587

Am I alone in thinking that this made up by the RBNZ isnt this the start of Hyperinflation because from where I sit it certainly looks like this is going to happen. You can not double the debt of NZ with in 6 months and expect nothing to occur , oh but wait lets blame it on a war before that it was a worldwide virus. Im sorry but if you believe this BS good luck to you

by RickStrauss | 21st Oct 22, 9:38am 1666298311

In retrospect perhaps pumping billions into the property market while dropping investor LVR requirements wasn't the best decision. Too much in welfare handouts for property now coming home to roost.

by solardb | 21st Oct 22, 7:24am 1666290264

Don't need to be a prophet to forecast the banks will make record profits, as their % margin stays the same on higher numbers.

by kiwimm | 21st Oct 22, 9:14am 1666296860

They are only able to maintain these artificially low fixed rates thanks to the margin they are making on the variable rates. This is effectively squeezing business harder to save the housing market. Unlikely to end the way they hope.