Westpac makes mortgage and term deposit rate changes

Personal Finance / analysis

Westpac has reacted to ASB's shift to an inverted mortgage rate card. They too have inverted, and matched ASB at the long end

26th Jan 23, 5:51pm by David Chaston

Westpac has reacted to ASB's shift to an inverted mortgage rate card. They too have inverted, and matched ASB at the long end.

But Westpac has been very much less aggressive with their rises at the short (high volume) end. And that has left ASB somewhat exposed.

Westpac's +10 bps rise for a 12, or 18 month fixed home loan rate puts them -25 bps and -20 bps below the new ASB levels. They match them at 2 years.

Now only BNZ and Kiwibank have rates lower than Westpac among the main banks.

Still, no main bank is anywhere near Heartland Bank's home loan rate card, none of which are over 6%.

Al challenger banks are still very competitive for mortgage rates of 2 years or less.

Westpac also raised term deposit rates for terms less than 1 year. That has made them more competitive in this space, but not market-leading. ASB also followed up its mortgage changes with RD adjustments.

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 January 23, 2023	%	%	%	%	%	%	%

ANZ	6.60	6.54	6.64	6.74	6.84	7.54	7.64
	6.84	6.84	6.79	6.79	6.69	6.59	6.49
	6.49	6.49	6.59	6.59	6.69	6.79	6.79
	6.50	6.39		6.65	6.79	6.79	6.79
	6.59 +0.10	6.59 +0.10	6.69 +0.10	6.79 +0.10	6.69	6.59 -0.10	6.49 -0.30

Bank of China		6.15	6.25	6.35	6.35	6.55	6.65
China Construction Bank	6.60	6.54	6.64	6.74	6.84	6.85	6.85
Co-operative Bank [*FHB special]	6.39	6.29*	6.39	6.59	6.69	6.79	6.79
Heartland Bank		5.89	5.99	6.05	5.95
HSBC	6.44	6.44	6.59	6.69	6.79	7.29	7.39
ICBC	6.29	6.25	6.35	6.45	6.65	6.85	6.85
	6.39	6.39	6.49	6.54	6.59	6.65	6.69
	6.29	6.29	6.39	6.49	6.65	6.75	6.79

Fixed mortgage rates

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Source: interest.co.nz

Source:

Daily swap rates

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Source: NZFMA

Comprehensive Mortgage Calculator

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21 Comments

by Yvil | 26th Jan 23, 8:07pm 1674716851

Hmmm, another bank with inverted rates... am I the only one who understands the meaning of this rate inversion?

by Carlos67 | 26th Jan 23, 8:45pm 1674719106

Did someone say 2008 all over again ? 12 to 24 months before a full on market crash.

by fat pat | 26th Jan 23, 8:53pm 1674719608

So rates are going lower everywhere in the world. All the major US yield curves are inverted. We're heading into a massive global recession. Is that about right?

by HouseMouse | 26th Jan 23, 9:01pm 1674720091

Yes.

But most commenters on this website seem to think the interest rate path is on an upwards trajectory across 2023 and 2024.

I don’t and that’s why I locked in an 18 month mortgage term in November.

by Pa1nter | 26th Jan 23, 9:03pm 1674720199

Why didn't you go 5 years when you could.

I wasn't even on here then and could see money wasn't going to get much cheaper.

by HouseMouse | 26th Jan 23, 9:15pm 1674720909

Yes I should have, as I am sure many other people would say too. But easy in hindsight. Very few people picked the aggressive and fast rise in interest rates, nor the Ukraine War that exacerbated that. And negative interest rates were being seriously entertained.

by Pa1nter | 26th Jan 23, 9:20pm 1674721226

That 2020 period was a pretty wackadoo period in history so the low rates did seem fairly temporary.

I viewed it as a bird in the hand scenario. 5 years of certainty at much lower than average rates is a good enough coup.

by Zachary Smith | 27th Jan 23, 7:40am 1674758434

They were talking about negative interest rates at that time and the UK had much lower rates for a long period of time.

by Pa1nter | 27th Jan 23, 12:01pm 1674774092

Guess there's trusting the authorities 100%, and reading the situation.

Fact is most people took those juicier 1-2 year rates and assumed/hoped there was more to come.

by Whatwillhappen | 27th Jan 23, 9:22am 1674764570

A good enough coop? :)

by Pa1nter | 27th Jan 23, 12:19pm 1674775153

That's chickens I think.

by Carlos67 | 27th Jan 23, 7:18pm 1674800321

I don't think anyone picked the speed of the rate rises but pretty much you could pick that rates were going up from March 2022.

by Pa1nter | 26th Jan 23, 9:01pm 1674720104

It's really a case of anything goes.

It'll be years before things get normal and we won't know what that normal is till it's been around a while.

by Nifty1 | 26th Jan 23, 9:32pm 1674721953

Imagine if someone fixed for 4 or 5 years at ANZ before doing any research...ouch.

by Gibgibgib | 26th Jan 23, 11:31pm 1674729098

ANZ has special rates for 4 & 5 years inline with the others, they just don't advertise/publish them

by DollarsandSense | 27th Jan 23, 4:41am 1674747700

Sorry Yvil I get curve inversion but what needs to be taken into account is wholesale rates across all points of the curve have fallen since end of December. Banks are raising short term rates simply because they have larger pockets of fixed term mortgages coming up for renewal and with all the talk of rates having to fall and the end of this year, and interest rate markets in the wholesale market reflecting this, customers are likely to fix short rather than long and so banks are just wanting to profit more from those shorter term fixed rollovers. That is the economic reality and reflection of banks not being fair and transparent. Hope that the Conduction of Financial Institutions framework has more than baby teeth in the application.

by DollarsandSense | 27th Jan 23, 5:18am 1674749929

and just to add facts to the Westpac decision - they last changed their 1,3,5 fixed rate mortgages on 30 Nov 2022. At that time the Interest Rate Swap rates were 5.27%, 4,85% and 4.51% respectively for 1,3,5 years.

Yesterday those rates were 5.26% (DOWN 0.01%), 4.47% (DOWN 0.38% - Westpac did not shift their 3 year rate) and 4.21% (DOWN 0.30% move matched by Westpac but not many people will go for such a term - just look at RBNZ data) - maybe Westpac meant to lower the 1 year rate but got the sign wrong when typing it in and the decimal point - neither critical things in banking eh?

by HouseMouse | 27th Jan 23, 7:39am 1674758357

by huttman | 27th Jan 23, 9:29am 1674764963

the banks are trying to lock people at higher rates for longer, I think.

by company of heroes | 27th Jan 23, 11:31am 1674772298

Yes, agreed. This shows that what they are actually doing right now is contradicting with what they are saying / forecasting about RBNZ's next coming OCR decision. Lots of news reported ASB bank's rate changes titled in ASB dropped 5-year rate giving people kind of delusion that rates are coming down, but it's actually not. It's more like they are matching the short-term rates with long-term rates. And ANZ's changed their call on next OCR decision to 50bps, to me, it's not that they really believe that would happen but it's more like they are creating a narrative with other banks try to bring some influence on RBNZ's next OCR decision.

by Carlos67 | 27th Jan 23, 7:22pm 1674800560

ASB TD's now 5.30% for the 12 month and 3 year with slight dips in between. Will be going long come the end of February this time I think. If the RBNZ goes 75bps in Feb then things are going to get spicey.