In an unusual move, BNZ is raising its floating mortgage rates by +20 basis points (bps) to 8.69%.
That will take them marginally above the 8.64% floating rates in place for ANZ, ASB and Westpac. Kiwibank has a floating rate of 8.50%.
The BNZ move is effective for both existing and new customers from Wednesday, August 16.
It applies to all their floating rate products, their Standard/Fly Buys variable rate loans, their TotalMoney loans, and the MortgageOne and Rapid Repay revolving credit loans.
The banks with the lowest floating rates are now Bank of China with a 'special' floating rate of 7.49%, ICBC with 7.50% and Heartland Bank at 7.75%.
BNZ's move comes after wholesale rates have barely risen after the last OCR rate hike on May 24. The OCR is currently 5.50% and is expected to stay at that level for some time.
Since May 24, the one year swap rate has risen +10 bps (going from 5.74% to 5.84%), and the 90 day bank bill rate has fallen -3 bps (going from 5.69% to 5.66%).
But the bank has also raised additional Tier1 capital via a perpetual preference share issue which cost it 7.30% pa in a $375 mln issue on June 14.
18 Comments
High interest rates for a few years is great, especially if you have fixed for those years.
Its in response to High Inflation, which over the past 3 years and next year will compound to about a 25% Rise in Inflation.
Higher costs of living, higher rents, higher wages, everything 25% higher, including House Prices which will catch up to the increase in wages and rents.
High Interest Rates are a cost which is a temporary cost.
The 25% Inflation is permanent shift in prices > So debt just got inflated away by 25% - permanently.
If you had 10 Million Dollars in Debt
You just made 2.5 Million !!!!!!!!!!
We come off a 5 year fix @ 4.95% in December 2026. By then even if pay rises are 5% p.a. (our household pay rises have been considerably more so far) that's 28% up and something like 12% of the principal gone.
But assuming 5% p.a. rises, an 8% interest rate will be the break even on a % of income basis.
"High Interest Rates are a cost which is a temporary cost."
Temporary you reckon? All of us are about to pay a lot more for a lot longer than many expected.
United States' credit rating downgraded...The downgraded credit rating could make it more expensive for the US government to borrow in debt markets.
Oh, and that Debt that's been Inflated away by 25%? Sounds good, as long as the asset(s) that support it haven't fallen in resale value by that amount... or more. No point having $10 million in Debt if the resale vale of what support it is $5 million. eg:
Good Spirits Hospitality has agreed to sell its nine bars, including the Cav and Danny Doolan’s, for $20.7 million and plans to delist from the sharemarket. The hospitality group reported accumulated losses of $41m in its latest accounts.
Debt, Debt predicated upon Debt can only end in bankruptcy no matter how you shuffle the chairs on this financial Titanic. Unfortunately the vast majority are in a self emposed ride on the hamster wheel of debt. Answer, strive to become your own central bank by paying off debt, then hold appreciating assets and maybe pms....or pull the blanket over your head in denial.
My read is that BNZ - like other major banks - are doing everything they can to discourage people going floating or short (1y or 18m or 2y). They know that the economy is going to tank the 2nd half of this year and the RBNZ will be forced to make lovin' statements beginning Feb/Mar '24.
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