Westpac the next to raise rates

Personal Finance / analysis

Westpac joins ASB and ANZ with higher fixed home loan rates. It also raises term deposit rates. With the majors mostly falling into line with the ASB-led hiking, all eyes will now turn to BNZ and Kiwibank

24th Aug 23, 5:13pm by David Chaston

The next bank to move fixed home loan rates up, is Westpac.

This reverses its -10 bps cut to its two year fixed rate on August 14, now raising that same rate by +20 bps to 6.89%.

Also changed is a +26 bps rise to its five year fixed rate. This is notable because the previous five year rate was one of only two in the market below 6%. (Now only SBS Bank's three year rate is below 6%.)

Westpac's rate rises are actually relatively modest. They haven't raised them to more than just matching their main rivals. ASB opened the door and now both ANZ and Westpac have taken the invitation to raise rates.

At the same time, Westpac has raised some term deposit rates. The most notable one here is the +60 bps jump in their two year rate offer, to 6.00%. They join main-bank rival ANZ with a 6% rate although ANZ's is for an 18 month term.

BNZ and Kiwibank are the remaining two majors yet to announce recent changes.

Banks will [rightly] point out that wholesale swap rates have been rising globally. However, on Thursday we saw quite a sharp reversal back down in benchmark wholesale rates. It is just one day however, and the overall pressure is for higher benchmark rates.

Obviously you should negotiate and 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 25, 2023	%	%	%	%	%	%	%

ANZ	7.09	7.25	7.04	6.99	6.69	7.09	7.09
	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	7.25 +0.06	6.95	6.89 +0.20	6.69 +0.20	6.49 +0.20	6.25 +0.26

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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Source: interest.co.nz

Source:

Daily swap rates

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Source: NZFMA

Comprehensive Mortgage Calculator

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51 Comments

by Dgm | 24th Aug 23, 5:21pm 1692854476

It's a game of snake and ladder with direction pointing upwards.. pain will only get worse...

by WellingtonInvestor | 24th Aug 23, 5:28pm 1692854931

Savers have felt the pain for the last 3+ years, so it is the borrowers turn. Although Banks are the winners no matter who feels the pain.

by Mofo Fomo | 24th Aug 23, 5:32pm 1692855162

And the gumment with tax!

by Frank Sobotka | 24th Aug 23, 6:14pm 1692857672

More like 15! GFC prompted rate cuts that got turbocharged by COVID. That decade of decadence is over.

Rates are normalising. As Clubber Lang predicted - PAIN!

by WellingtonInvestor | 24th Aug 23, 6:39pm 1692859195

Yes you are right, but the last three years have been especially bad for savers.

by Justa comment | 24th Aug 23, 7:33pm 1692862418

The TD rates 6% for 2 yrs and 5.4% for 5 yrs are market leading. Yes savers finally at the top of the cycle. I have a house (that I live in) and TDs, so just roll with the cycles......

by fortunr | 25th Aug 23, 8:37am 1692909449

Finally, interest rates are returning to a normal level. Very good. Economy reality is asserting itself, after a long delusional period of ultra-loose monetary conditions.

by ACB | 27th Aug 23, 9:57am 1693087035

Except after tax and inflation, returns are still negative. "Money illusion"?

by WellingtonInvestor | 29th Aug 23, 11:54pm 1693310062

I think a lot of people at the moment are in defensive mode. Shares have gone sideways for the last year and house prices have crashed. So a 5.5% Kiwibond return isn't too bad.

by kiwimm | 25th Aug 23, 10:26am 1692915967

The housing market was all ladders (although many were pulled up) for 20 years. Now it's just snakes.

by Albert2020 | 24th Aug 23, 5:37pm 1692855444

That picture sums up the state of our banking in NZ perfectly....

by Independent_Observer | 24th Aug 23, 5:43pm 1692855816

Now people will ask for pay rises in the workplace to pay for the higher mortgage/rent costs, and in order to stop businesses from going to negative cash flows, the price of goods and services will rise to pay for the high wage business expense. Higher prices for goods/services will feed into the CPI and be noted as higher inflation by the RBNZ, which means interest rates will go up again...

by Albert2020 | 24th Aug 23, 6:00pm 1692856851

They can certainly ask but what are the chances of a positive response given the deterioration of the economy over the past 6 months? I suspect most people will be just putting head down and bum up and hoping not to be made superfluous to their employers needs.

by Nifty1 | 24th Aug 23, 6:11pm 1692857480

Even Westpac won't pay their staff more despite sky high profits...https://i.stuff.co.nz/business/300943387/westpac-workers-to-go-on-natio…

by JBA | 24th Aug 23, 6:58pm 1692860327

just capitalism working as intended.

by Spiceeh | 24th Aug 23, 11:10pm 1692875417

You'll never convince a plebeian capitalist that it's the system they love gradually shifting their wealth to those further up the food chain.

by JBA | 25th Aug 23, 8:14am 1692908048

Sadly, so far I have no evidence to the contrary.

by Eschaton | 25th Aug 23, 7:16am 1692904612

Exploitation.

by Solid_Granite | 24th Aug 23, 6:05pm 1692857131

And that loop will keep going until people stop being dumb with money and change their spending behaviour, seeing saving as good and debt as bad instead of the other way around as it has been.

by Frank Sobotka | 24th Aug 23, 6:20pm 1692858049

We used to make stuff in this country, build sh1 t. Now we just stick out hand in the next guys pocket.

Until their is a crackdown on the real estate industry and their ruthless pumping scheme then its going to be hard to stop.

by Yvil | 24th Aug 23, 7:14pm 1692861286

What's the correlation between your first and second paragraph?

by Frank Sobotka | 24th Aug 23, 7:48pm 1692863317

We no longer make anything. The real estate industry is just robbing Peter to pay Paul. There’s no growth and no nothing for the working man.

by Blackbeard | 25th Aug 23, 8:18am 1692908336

Well, there is growth in debt.

by WellingtonInvestor | 24th Aug 23, 6:41pm 1692859302

But if businesses start laying people off, workers will just be thankful they have a job and won't want to rock the boat. I understand the RB has engineered unemployment numbers to increase with the OCR increases.

by Independent_Observer | 24th Aug 23, 7:05pm 1692860735

That is the difficulty we face - either prices keep going up, or people lose jobs (and default on rents and mortgages).

What is going to be worse? Is persistently high inflation (and employment) going to be better than people losing jobs and defaulting on mortgages?

by John from Bunnings | 24th Aug 23, 7:05pm 1692860716

Or…how about pay rise requests will be denied, as business revenue slumps due to diminishing disposable income levels. Higher and higher portions of income will be eaten up by mortgage payments/rents, spending will continue retracting, business profits plunge, unemployment will rise, and eventually rates need to be cut back to stimulate growth again. But hey, we’re all just guessing. ;)

by Yvil | 24th Aug 23, 7:16pm 1692861392

I would say you're guessing better than most !

by OldSkoolEconomics | 25th Aug 23, 7:24am 1692905074

Sounds right.

The question is whether we can cut rates if the rest of the world (Fed) need to hold theirs high. A lot (most) of our issues seem to be domestic.

by tim52 | 25th Aug 23, 8:40am 1692909615

This looking at just a small part of the "first order effects" of an OCR increase and calling it inflationary is just cope. The only bargaining power employees have is new willingness to work harder because they need to cover increased costs. When they work harder their productivity is also improved to an extent which offsets this inflation. Like how landlords struggle to increase rents to cover new costs, the employer does not magically find money just because some of their employees demand it a little stronger than last year.

You could could also consider other parts of the picture such as if rates were lower or left where they were. Where, people are able to inject lower multiples of their income into the economy every time they take out a mortgage.

by Frank Sobotka | 24th Aug 23, 6:10pm 1692857400

The scrolls were right!!!

#justice4hawkesbay

by Mofo Fomo | 25th Aug 23, 10:53am 1692917624

Yip!... come on guys our brother has been shafted for hurting nobody.

Bring back Hawkes Bay

by KH | 24th Aug 23, 9:33pm 1692869620

Monday just past WP offered me 6.1% on a $100K TD. Felt 50/50 I would talk them up to 6.2 on the day.

Takes about a week to free the money so TD will happen mid next week.

Now it will be 6.3% (prediction haha). See how we go.

by dbbr | 24th Aug 23, 10:16pm 1692872211

how long is the term?

by KH | 25th Aug 23, 8:06am 1692907563

TD for 12 months. Sorry, should have said.

by kwbrn | 25th Aug 23, 8:34am 1692909248

They must be getting desperate.

A few months ago I tried to get a better rate from Rabo on a similar amount. Their reply was if you have five million or more we will negotiate.

by Justa comment | 25th Aug 23, 7:28pm 1692948538

Rabo dont negotiate, carded rates only. They actually havent been that attractive, not really offering much risk premium over the big 4 + KB.

by nathstar | 25th Aug 23, 12:17pm 1692922627

BNZ gave us 6.2% for a 1y $100K TD three months ago (back in May). Interest paid out on maturity.

by KH | 25th Aug 23, 12:33pm 1692923614

Nice. Good info. Thanks

by Mofo Fomo | 25th Aug 23, 12:42pm 1692924167

Really.? Like to see evidence of That.

by nathstar | 25th Aug 23, 1:57pm 1692928656

Lol. I have no reason to make this up. At the time, the best I could get via the BNZ app (DIY) was 5.75%, so I asked my manager for their best 1y rate and she manually set it up for me. If interest was paid out monthly, the best she could do was 6.05%.

Can't attach screenshots here, but here's the details copied straight from the BNZ app...

BALANCE 100,000.00

Start date 4 May 2023

Term 365 days at 6.20% p.a.

Maturity date 3 May 2024

Interest paid At maturity to term deposit

Interest earned to date before tax deduction 1,919.45

by KH | 25th Aug 23, 3:04pm 1692932692

Yes Nathstar. My experience as well. With my Westpac person I always ask directly, and she always gives me an extra bit. Recently I asked to up the offer then a bit more. No luck. So. Don't just take what is on the website, always ask.

by nathstar | 25th Aug 23, 3:17pm 1692933453

Nice one KH! Yes, it seems to be the way they work. Kind of wrong of them really. If you don't ask you don't get. I recall a while ago my bank manager told me if I ever want to setup any TD's to contact her and she'll be able to offer a better rate than what I could get via the BNZ app.

by Zwifter | 25th Aug 23, 7:18pm 1692947939

The difference is that is paid at maturity and not monthly like mine. This is no good if you are living on the interest. Also the difference can be that the interest is compounding.

by nathstar | 28th Aug 23, 10:01am 1693173677

Zwifter, that's right. They offered me 6.05% if the interest was to be paid monthly.

by Antz | 25th Aug 23, 7:51am 1692906679

One could almost say mortgage rates are at 6s and 7s (;-) ...

by 1689 Baptist | 25th Aug 23, 9:00am 1692910845

And on a more interesting note, has anyone else noticed how juicy the grapefruit are this season?

by kiwimm | 25th Aug 23, 10:33am 1692916399

Is this a euphemism?

by malamah | 25th Aug 23, 1:32pm 1692927177

Nah, the national birth rate is in the doldrums.

by Frank Sobotka | 25th Aug 23, 6:47pm 1692946049

Yep, thanks to the boomers there won’t be enough workers to wipe their backsides and make their coffees.

in a shrinking world the war for young workers is heating up and isolation, low wages and poorly built overpriced houses won’t cut it

by Nzdan | 26th Aug 23, 7:51am 1692993095

So we import those care workers from other countries with appalling human rights conditions. Will likely hear of more and more cases of abuse at the hands of these carers. We will at least hear it from the victims that aren't dribbling incoherently 100% of the time.

by WellingtonInvestor | 29th Aug 23, 11:57pm 1693310271

I am not surprised, I don't know how people can afford to have children without being in a couple and having good jobs. Plus it is a lot of work. An look at the way previous and current generations have treated the world. Decreasing human population over time is probably what is needed. But countries and economies need economic growth and that requires population growth.