More inverted home loan rate offers

Personal Finance / analysis

ANZ and BNZ both change fixed mortgage rates, embedding inverted offerings into their rate cards as wholesale rates shift lower

2nd Feb 23, 8:02am by David Chaston

Source: 123rf.com Copyright: betago

ANZ and BNZ adjusted their fixed rate card home loan offer rates Thursday, following recent changes from Westpac and Kiwibank.

All these banks are reacting to wholesale rate shifts, which saw ASB first shift to an inverted rate card.

Thursday's changes brought rate cuts across the board from 18 month and longer from ANZ, but in increasingly larger ones for longer terms. That has the effect of having its two and three year fixed rates lower than rates for shorter terms.

BNZ did something similar, but by raising its short rates and lowering its two year rate. However, it left its longer rates unchanged.

Among the big five banks, Kiwibank now has the lowest one year fixed rate at 6.49%.

ANZ has the lowest two year fixed rate at 6.45%. And their 6.59% three year rate also is the lowest offer among these big five banks.

Among challenger banks, almost all these banks have lower one and two year rates than the majors.

On Wednesday wholesale swap rates retreated sharply again, and this opens up space for potentially further reductions in home loan rates.

Financial markets seem to have concluded that the December labour market data was soft enough that the RBNZ will ease off its hard tackling of inflation at their next MPS review on February 22. Following from this judgement, they have bid down swap rates again.

Despite this, ANZ raised its term deposit rates across the board at the same time it adjusted its mortgage rates. BNZ didn't announce any matching TD rate changes however.

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 February 2, 2023	%	%	%	%	%	%	%

ANZ	6.60	6.54	6.49 -0.15	6.45 -0.29	6.59 -0.25	7.19 -0.35	7.09 -0.55
	6.84	6.84	6.79	6.79	6.69	6.59	6.49
	6.54 +0.05	6.54 +0.05	6.59	6.49 -0.10	6.69	6.79	6.79
	6.50	6.49		6.49	6.79	6.79	6.79
	6.59	6.59	6.69	6.79	6.69	6.59	6.49

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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44 Comments

by Pa1nter | 2nd Feb 23, 8:15am 1675278959

'Nearly 7%' rates, guaranteed!

by tulips | 2nd Feb 23, 8:52am 1675281153

To be fair ANZ are still offering 7%+ rates

by nktokyo | 2nd Feb 23, 9:08am 1675282119

True believers

by Pragmatist | 2nd Feb 23, 9:42am 1675284169

Not if you have 20% equity. They don't publish their 'Special' 4 and 5 yr rates, but they are competitive with the other big banks.

by Pa1nter | 2nd Feb 23, 11:31am 1675290690

That'll make the disclaimer lists for a 7% prophecy too long.

by Nifty1 | 2nd Feb 23, 8:45am 1675280700

It goes extremely quiet here whenever there's rate cuts...

by Yvil | 2nd Feb 23, 9:02am 1675281758

Yes, the mostly anti-property commenters, must be quite disappointed. I never understood why so many non property owners, post on a site that was born from reporting about 'Interest" rates for mortgages.

by nktokyo | 2nd Feb 23, 9:09am 1675282199

I'm in a few property and investment groups on Facebook. There are about 6 people who seem to flock to any post on any group and harangue anybody who is skeptical that the OCR won't go to 6% so half of Auckland winds up at mortgagee auction.

by Yvil | 2nd Feb 23, 9:29am 1675283397

Pretty sad for these people who don't own any properties, to go waste their time going on investor chat groups to vent their frustration.

by Cheetahlegs66 | 2nd Feb 23, 9:56am 1675284974

Two principal groups on this site.

Those who think folk who own rentals are 'despicable.' I suspect many of them are deeply envious and missed the windfall from long term investment. Seldom do they state how they have dollar cost averaged in share markets and purchased ETFs on a regular basis. They do sweet FA and will bitch and moan....year in, year out.

Those who own rentals and by and large have done well (financially) from their decisions. Played by the rules but are parasites for the resultant social inequity (yawn).

Disclaimer (I wish more folk would proclaim conflicts of interest). My 2 rentals which I regretfully sold allowed me to be freehold at 41.

Keep on with motel Yvil, it is hard work but pays dividends, 24/7 365 days/yr. One of the best, but hardest decisions our family ever made.

by nzphoenix | 2nd Feb 23, 3:15pm 1675304126

Those who own rentals and have done well are typically 45+ and are literally land scalping - condemning the majority of those younger to financial insecurity and unaffordable costs for shelter.

Those who are envious perhaps are too young to have had the "opportunity" to load up on cheap housing and are more pissed off that it was allowed to happen at such a scale - and that those in power don't/won't do anything to stop it.

Don't strain yourself too much as you pull the ladder up behind you.

by Pa1nter | 2nd Feb 23, 6:11pm 1675314660

Works out, no one wants to use ladders anymore.

by Small Kev | 2nd Feb 23, 10:43am 1675287809

“waste their time going on investor chat groups to vent their frustration”

So true, instead of utilising their valuable time to do better things for themselves.

Some of those “fake investors/landlords” on Facebook tend to promote “negative news” with posts like “interest rate is skyrocketing, the market is bad, we are consider selling down … “

by Pragmatist | 2nd Feb 23, 9:47am 1675284436

Yes, i'm sure they are the same ones that post on here and on reddit. I do wonder if they get any work done in the real world.. maybe they should spend more time worrying about earning their pay than trying to talk the market into an early grave?

by Simon | 2nd Feb 23, 9:31am 1675283509

That point has also interested me. But then I think back a couple of decades and not this site but property forums were a main hangout for me as a wana be first home buyer. It shows the latent demand side still very strong in NZ and NZ'ers either own or want to own property. Healthy stuff in my opinion - better than sitting on govt benefits renting and being at the mercy of market forces just to stay out of gang ridden emergency accomadation or high density state housing where lets face it your kids have no chance.

by huttman | 2nd Feb 23, 10:03am 1675285413

Honestly I'd be a bit cautious on this rate cuts, it's logical that they did cut, the question is if this trend persists.

Rates could still go up again as things are not quite clear yet.

by the Joneses | 2nd Feb 23, 12:56pm 1675295778

Well if someone doesn't own a house they most likely want to own one. Nobody enjoys having a landlord in their life and only a few require the flexibility of renting. And they will definitely need a mortgage to enable them to buy a house.

What is so hard to understand?

by Yvil | 2nd Feb 23, 8:59am 1675281547

Where are these 10% rates that we were promised, were "guaranteed" for 2023?

by Nifty1 | 2nd Feb 23, 9:00am 1675281603

Wonder if the scrolls got damaged in the flood...

by Yvil | 2nd Feb 23, 9:03am 1675281784

LOL

by nktokyo | 2nd Feb 23, 9:10am 1675282222

Gold!

by Pragmatist | 2nd Feb 23, 9:39am 1675283951

Stood too near the goats on the ark and they got eaten?

by Averageman | 2nd Feb 23, 9:59am 1675285173

Haha, well pitched.

by Carlos67 | 2nd Feb 23, 10:19am 1675286369

Just read the rest, you bet me to the Ark joke Prag.

by General Comment | 2nd Feb 23, 10:10am 1675285858

"I was referring to inflation of *insert random commodity here* prices. And I have been proven correct!"

by nguturoa | 2nd Feb 23, 9:02am 1675281775

Personally I think it doesn't really make a big difference for NZ as we are just too short sighted and bulk of our mortgage rates are fixed for one year and some for 2 years. 3-5 years is probably less than 5% of the market.

by Yvil | 2nd Feb 23, 9:04am 1675281861

How long did you fix your mortgage for Ngutora, do you even have a mortgage?

by nktokyo | 2nd Feb 23, 9:08am 1675282097

It's almost as if they are pricing in future rate declines...

by HouseMouse | 2nd Feb 23, 9:36am 1675283810

Yep.

Hopefully all that prophecy garbage will be silenced in the near future.

by Cur8or | 2nd Feb 23, 9:17am 1675282634

I think Heartland's 2 year rate is 5.99, not 6.05.

by rjn1 | 2nd Feb 23, 9:40am 1675284024

I'll repeat my recent prediction. Rates have peaked, floor will be in for residential property within the next few months. Look how the market reacted when there were signs of an interest rate top around last September. This time it's the real deal so we'll get follow-through.

by HouseMouse | 2nd Feb 23, 10:16am 1675286175

Don’t agree.

even if rates have peaked, which they might have (or close to it), prices are too high still. It’s not stacking up for investors, or for FHBs (generalised statement, obviously it will for some)

I see falls (up to 10% more) continuing through most of 2023, with stabilisation from late 2023, and possibly small increases early / mid 2024.

by Yvil | 2nd Feb 23, 10:44am 1675287849

Agreed.

by rjn1 | 2nd Feb 23, 11:48am 1675291691

You might be right. The current market feels like it's at the beginning of capitulation to me. But as you say, it could have further to go. I just have a sneaky suspicion we're nearly there. Only time will tell...

by Averageman | 2nd Feb 23, 10:25am 1675286707

End of the day NZ follow along the trends from offshore. If the Fed keeps lifting we have no choice to follow as we are a dot floating in their wake, and the ripples move through assets not supported by income. As rates lift, or not, pressure from rolling debt from a little to a more normal rate will cause pressure and some failures. Enough failures and margin calls get cranked up.

Debt supported by income is fine. US share market speculation is a good example of this with the massive declines in the last twelve months.

by Simon | 2nd Feb 23, 10:24am 1675286675

US fee hiked 25bps.

US 10 year bond DROPPED to 3.39% after FED commentary.

US market pricing 1 more hike 25bps hike in March - then cuts at year end.

by Sam Hill | 2nd Feb 23, 11:07am 1675289235

Cutting longer term rates to entice borrowers in for longer. Banks know that within two years the rates will be a lot less and most people will go back to 1-year and 2-year loans. If someone's budget is really tight and their mortgage is about to roll over, they can save a little bit now by locking in for longer then they may very well do it.

by rjn1 | 2nd Feb 23, 8:13pm 1675321989

Or the less dubious explanation, cutting longer term rates to reflect changes in the wholesale market that typically happen at the end of a tightening cycle.

by Thats All Folks | 2nd Feb 23, 12:10pm 1675293034

The commenters giddy over minor rate cuts is just inconsequential noise and a sign of desperately trying to find any form of hope to cling to.

The short term thinking here and from “the market” is akin to crack addicts looking for their next fix.

Much the same as the idiots who repeatedly invest in China and end up getting burned.

by Uh Oh | 2nd Feb 23, 3:32pm 1675305134

Yes, they're offering inverted interest rates, but bond yields have been inverted for > 6months so no surprise really...

http://www.worldgovernmentbonds.com/country/new-zealand/

by Sibrit | 2nd Feb 23, 4:10pm 1675307425

We still expect the RBNZ to raise the OCR on the 22nd, right? Although maybe by only 50 basis points.

Will that trigger banks to raise their fixed rates but still keep the inversion?

Are we expecting these wholesale rate shifts to put downward pressure on banks term deposit rates?

by Yvil | 2nd Feb 23, 5:30pm 1675312203

Short term rates (1 & 2 years) are likely to rise but not the longer end, so yes, the inversion is likely to be more pronounced.

by Carlos67 | 2nd Feb 23, 5:49pm 1675313365

I agree, banks will encourage you to go short term now by offering great 12 month rates and possibly back to the 9 month special that ASB used to run with. They will no longer be wanting people to go long and why wouldn't you ? If you are at ASB and keep it in for at least 12 month on say a 3 year and rates rise you can pull it out with 30 days notice and no penalty and reinvest at the higher rate because the 12 month rate is identical to the 3 year. If rates dive in 12 months then you obviously keep it in on the 3 year, its a win win.

by rjn1 | 2nd Feb 23, 8:25pm 1675322714

Even short term home loan rates (beyond 6 months) are unlikely to rise with the coming OCR hikes unless there is a material change to the expected track. As usual, the market has fallen, at least initially, for central bank jawboning. That will continue to dissapate. The reaction to RBNZ's November commentary is a case in point. They'll try it again later this month, but even they understand the story of the boy who cried wolf.

RBNZ have switched to outsized inflation forecasting, presumably as a means to try and counter the increasingly levels of forecast undershoot. In doing so, they've set themselves up for a credibility showdown.