ASB is no longer "offering" the highest carded fixed rates in the home loan market.
It seems odd that banks are now 'competing' to raise mortgage rates.
ASB's Monday move up has emboldened another main bank to raise fixed rates with ANZ taking up the challenge. Its increases for fixed terms less than two years are relatively minor, but are up +20 basis points for two years and longer.
To be complete, we should note that they cut their six month fixed rate, but that is a term that has insignificant market share.
ANZ how has the highest carded rates of any bank for all terms of one year and longer, sharing some tenors with ASB.
Banks will [rightly] point out that wholesale swap rates are rising globally. And ANZ has at least raised its offers to term deposit rates significantly for an 18 month term. Details here.
The spring real estate selling season is going to start with home loans costing more, at least from these two main banks, the two with the largest existing market share.
And remember, in contrast, some challenger banks have trimmed rates - recall SBS Bank now offers 5.95% for a three year fixed term.
Obviously you should negotiate and shop around. ANZ and ASB's existing clients who are rolling over may be the most motivated to shop around. Most banks will discount their carded rates if you have strong financials. You shouldn't need them but if you are uncomfortable negotiating, a broker can often be helpful. But be aware some brokers won't offer you the best over the whole market, only the banks they have approved connections to in their "lending panel." And clearly bank mobile managers are there to pitch their company's own product.
One useful way to make sense of the changed home loan rates is to use our full-function mortgage calculator which is 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 August 23, 2023 | % | % | % | % | % | % | % |
| ANZ | 7.09 -0.10 |
7.25 +0.06 |
7.04 +0.15 |
6.99 +0.20 |
6.69 +0.20 |
7.09 +0.20 |
7.09 +0.20 |
 |
7.45 | 7.25 | 6.95 | 6.89 | 6.69 | 6.59 | 6.49 |
 |
7.39 | 7.19 | 6.95 | 6.79 | 6.49 | 6.49 | 6.49 |
 |
7.15 | 6.99 | 6.79 | 6.49 | 6.29 | 6.29 | |
 |
7.19 | 7.19 | 6.95 | 6.69 | 6.49 | 6.29 | 5.99 |
| Bank of China | 6.89 | 6.79 | 6.59 | 6.29 | 6.19 | 6.09 | |
| China Construction Bank | 7.19 | 7.09 | 6.89 | 6.75 | 6.45 | 6.40 | 6.40 |
| Co-operative Bank [*FHB special] | 6.99 | 6.79* | 6.89 | 6.75 | 6.49 | 6.49 | 6.49 |
| Heartland Bank | 6.59 | 6.59 | 6.45 | 6.15 | |||
| HSBC | 7.19 | ||||||
| ICBC | 6.95 | 6.79 | 6.65 | 6.45 | 6.29 | 6.29 | 6.19 |
 |
7.19 | 7.19 | 6.95 | 6.74 | 5.99 | 6.59 | 6.69 |
 |
6.99 | 7.19 | 6.99 | 6.79 | 6.49 | 6.49 | 6.49 |
Fixed mortgage rates
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70 Comments
Someone predicted 10% guaranteed this year.
Looks like it will be a reality.
Over priced NZ real estate is going to have a rude awakening.
1. Dairy industry is not going to make as much as predicted.
2. China is going through a debt cycle and our economy highly dependent on that country. All eggs in one basket.
3. Tourists are only trickling slowly as we are an expensive destination at the bum end of the world.
4. We only invest in one thing, real estate and buy from each other at every increasing prices so offshore owned banks can make profits.
God save NZ
If you were to take out a variable rate mortgage with low equity margin (>90% lending), you could be paying 10%. Here are the figures for the big 4 (variable rate + low equity margin = total)
ANZ - 8.64% + 2.00% = 10.64%
ASB - 8.69% + 1.30% = 9.99%
BNZ - 8.69% + 1.00% = 9.69%
Westpac - 8.64% + 1.50% = 10.14%
8.74% from ASB is 1.74% higher than the 7% mentioned above, rounds to 2% .
https://www.asb.co.nz/home-loans-mortgages/revolving-credit-home-loan.h…
You're a muggins if the majority of your mortgage is on revolving (or you have almost no mortgage left).
Any normal discussion of mortgage rates on this site is referring to fixed term "special" rates from the main banks, not revolving, offset, low-deposit or 2nd tier lenders unless specifically mentioned IMO. Thats the lending that makes up most of the banks residential mortgage lending, and what most people are refixing to when up for renewal.
The 31,000 loans between January 2020 and October 2021, totaling over $15 billion, that had less than 20% equity?
https://www.stuff.co.nz/business/money/300941816/the-home-loan-borrower…
There could be a lot more.
How many bought between October 2021 and August 2022, and have now seen their equity eroded to less than 20% as prices fell? So long as their bank doesn't revalue they will be fine, but if they are re-fixing, maybe the bank asks what the property is worth now, and if the loan amount is now more than 80% of the property value... Bam... You're on a standard rate with a low equity fee.
The higher you go in LVR, the more substantial the increase.
So eg ANZ charge 0.6% for a "Standard" rate, then they also penalize you with a "Low Equity Premium" on top of the 0.6% for standard rates:
80% – 85% = Premium of 0.25%
85% – 90.00% = Premium of 0.75%
Over 90% = Premium of 2.00%
See pg7 of https://www.anz.co.nz/content/dam/anzconz/documents/rates-fees-agreemen…
And BNZ will add another 2% if you default on a repayment. I just don't get it. Lenders seem to punish those that need the most help. Either that, or they are really trying to make a point that poor people shouldn't buy houses. Nowadays, poor applies to over the half the population of New Zealand.
First they have to actually cast a vote, something they have typically been very poor at doing. Then they have to cast it for a party that makes the threshold, so not ALCP, Freedumbs NZ and their ilk. And of those that pass those hurdles, a good portion of them are why greens are polling at 12%, and Labour is not in the teens (yet).
Unless you can arrange for them to get out and vote in a cohesive way like never before their apathy and rebelliousness will not result in a great deviation from existing polling.
I have. Well, I wouldnt say they "like" Luxton and National, more that there is no way they are voting for Labour/Greens/Maori. Thanks to Covid disrupting their schooling over the last 3 years a lot of these first time voters have now left school and gone straight into jobs/apprenticeships instead of going to University, and as a result, they are not falling for the Leftist ideologies. They have discovered that taxes matter, and being able to afford to move out of home into a rental is the immediate aspiration. So the Nats policy of allowing these kids access to their Kiwisaver for a rental bond is probably bang on the money.
This chart shows the current US Treasury Yield Curve alongside the same from 3 months, and two years ago.
To move past its currently inverted state, which it eventually & inevitably will, one of two things must happen; either the short end will drop, or the long end will rise.
Over the past three months, the short end has remained static, while the long end has risen. While not an indicator of its future state, it does give pause for thought. Is it possible that we end up in a situation where the curves reverts to the shape it had in 2019, with the 2yr rate staying at 5% while the 10yr lifts to 7.5%?
Based solely on the recent trend, this does seem like a possibility. And it it turns out, there's every chance we'll see similar effects on our local mortgage rates as we've seen off the back of this recent lift.
Given the strength of the world economy in the face of rising interest rates, and the low unemployment both here and in the states, it looks like economies are more resilient than anyone expected, and even the RBNZ has mentioned the neutral cash rate is looking higher than they calculated. What we might be seeing is a nomalisation of interest rates, and as MediumPangolin says, once we are in recession, the yield curve will un-invert, and its looking like the long end is firming up.
That'll only widen our current account gap further with foreigners juicing more returns on their NZ investments out of the country each year. Putting oligopolies in foreign hands has not bode well for our country in the past and will be worse ahead with soaring business costs in NZ.
Take Bluebridge ferries for example: the service quality has dropped like a rock since it was acquired by Morgan Stanley in 2021. The new owner is evidently trying to sweat its aged fleets in an attempt to cream more return on assets/equity, not giving a rat's backside about the adverse impact on the communities in lower North and upper South.
Read about Thames Water (and others) in the UK. Asset stripped by Macquarie, no investment in infrastructure and ripping out absurd dividend payments. Thames Water is 80% levered to pay dividends from no debt at all. Macquarie were happy to pay the fines for dumping sewerage in the Thames - a case study in foreign investment in core assets.
I remember New Zealand Rail network and Toll
https://milfordasset.com/insights/government-toll-buy-a-sad-indictment
Ridiculous.
Cutting the OCR now would simply increase inflation and force the RBNZ to increase the OCR to an even higher level.
There is no free lunch. The only result of excessively loose monetary conditions is simply a stricter tightening of monetary conditions later on.
I thought this lesson would have been quite evident by now.
Banks do use deposits to fund lending, but on-call deposits need to attached to a swap contract to avoid exposure to the risk of deposit rates increasing and killing the banks margin on the loan. Term deposits don't need hedging with a swap contract if the term of the TDs matches the term of the fixed rate on the lending.
Don't be fooled. The bulk of the loose money has already been locked up in term deposits at rates way below 6%.
The 6% on offer won't attract much more and it'll be a tiny fraction of overall deposits. I'd suggest, being the cynic I am, that this is merely window dressing so they 'appear' to have skinny margins. The reality is that the margins - over the total lending - is way in excess of 1%.
Change your mortgage provider more often. When you shift from one bank to another you get:
1. rates that are less than the carded rate, sometimes considerably so. It cheap new business for them.
2. cash-back to cover the usual legal & conveyancing fees - usually with some left over.
It's also quite likely that your bank 'suddenly' finds a better rate when they know you're serious about changing. (I know ANZ does this.)
Banking at the retail level isn't much more than a utility service (water, electricity, internet, etc) and they never have to actually deliver anything physical, much like internet service providers don't either. Why we pay so much is con job.
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