ASB is trimming some home loan rates again.
It is doing this in response to last Tuesday's targeted cut by Westpac.
Neither are major shifts but they do suggest home loan rates are in a minor down-trend at present.
These trimmings come as the main real estate selling season starts to wind down, so this is the last meaningful chance banks have to boost market shares in this period.
Westpac moved its two year fixed rate down to 6.75%. ASB has matched that and also cut -16 bps from its five year fixed rate to also match Westpac at that term.
The last time a major bank had a two year fixed rate at 6.75% was in mid July 2023.
The challenger banks had already gone there, led by TSB, although there are others who remain there (CCB) or lower (Heartland).
The 6.39% five year rate is a return to levels offered by some main banks in mid-February 2024. And this level is now the lowest five year rate offered by any bank.
In the meantime, wholesale swap rates have reverted to their January-February levels after some "brief excitement" in March.
Neither Westpac nor ASB made any matching changes to their term deposit rates with this mortgage rate changes.
All this comes just a few days ahead of the RBNZ's OCR review on Wednesday this week. No analyst is expecting any change at this review. Not only will the RBNZ be watching the fading chance of a US Fed rate cut, but they don't know the NZ inflation rate for Q1 yet. That data doesn't drop until Wednesday, April 17, 2024. There is some scepticism that it will show the lower levels that the central bank wants to see to justify a rate cut.
Financial markets are still pricing in rate cuts in 2024 however. Presently they are pricing one -25 bps cut in August, another in October, and a third in November.
Obviously you should negotiate and shop around. Most banks will discount their carded home loan 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. They will become important in a falling market however.
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 April 8, 2024 | % | % | % | % | % | % | % |
| ANZ | 7.35 | 7.24 | 6.89 | 6.79 | 6.65 | 7.34 | 7.34 |
 |
7.29 | 7.24 | 6.89 | 6.75 -0.04 |
6.65 | 6.55 | 6.39 -0.16 |
 |
7.29 | 7.24 | 6.89 | 6.79 | 6.65 | 6.55 | 6.55 |
 |
7.35 | 7.25 | 6.79 | 6.65 | 6.55 | 6.55 | |
 |
7.39 | 7.29 | 6.95 | 6.75 -0.14 |
6.65 | 6.59 | 6.39 |
| Bank of China | 7.09 | 6.75 | 6.65 | 6.49 | 6.39 | 6.39 | |
| China Construction Bank | 7.19 | 7.09 | 6.89 | 6.75 | 6.49 | 6.40 | 6.40 |
| Co-operative Bank | 7.29 | 7.24 | 6.99 | 6.79 | 6.65 | 6.55 | 6.55 |
| Heartland Bank | 6.69 | 6.59 | 6.45 | 6.19 | |||
| ICBC | 7.19 | 7.05 | 6.95 | 6.85 | 6.59 | 6.49 | 6.49 |
 |
7.35 | 7.24 | 6.99 | 6.85 | 6.65 | 6.55 | 6.55 |
 |
7.39 | 7.24 | 7.19 | 6.75 | 6.65 | 6.59 | 6.59 |
Fixed mortgage rates
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39 Comments
"markets turn sceptical rate cuts are imminent"
Try telling resident Spruikers that. For years they promoted a productivity limiting party for which many innocents are expected to endure an oversized hangover. If only houses been viewed more for living in than speculating on, this journey would be less painful.
At this point in time, best keep it real and look to the FED. As for the timing of rate cuts on a local level, there may be some embarrassing complications in store if the button is pressed too early.
The biggest error all those people who own a house for "living in " was no to load up on the 5 year mortgage term at 2,99%.
For those that did there is still over 18 months to run at that rate. By the time it expires it should be safe to go back in the water again.
The shame was not one Mortgage Spruiker-as you call them-was shouting from the roof tops back in 2021 as they should have been to not let that opportunity pass you by. Where did they think long term rates could go from there?
Actually I took that rate, and length, and it was partly due to Tony Alexander’s comments when he was putting out ‘tonys view’ newsletters and LinkedIn stuff around the lockdown time. Stoked I did! Cheers Tone! Only wish I’d have done the whole lot rather than splitting it into a few different chunks!
We just missed out on that rate as it was in the first few months of the year. Wife convinced me to trade up later in 2021, by the time we settled in December the 5 year rate was 4.95% which we took.
So those on a 2.99% 5 year fix will have at most 12 - 13 months left to go. Still a great opportunity to pay down the principal amount as quickly as possible over the last 5 years.
I know several people who took 5 year rates since the GFC at various times who ended up paying a lot extra, so it does work both ways. Of course in hindsight it was a great idea this time...
The RBNZ has had several tightening cycles since the GFC, many people thought "rates will never go lower than now and could go higher", fixed for 5 years, and then something like Covid came along and they regretted it. I fixed for 2 years just before Covid thinking rates would never go much lower, lucky it wasn't longer...
not true mine expires 4th May 2026 -- so two full years --- although i will have sold well before then and hopefully retired ~ there really was virtually no chance of 5 year money ever being cheaper -- was a no brainer really -- rather than chase 1 year at 2.3 or 2.5%
Hard to see a return to those rates in teh next 5 years without some major global calamity -- Win some lose some though -- i missed a few good rates in my time -- so was nice to be on the right side of this ledger
Sounds like you got in just in the nick of time, we would have as well if we weren't with ASB as they moved first. We went to lock in for 5 years on 6 May 2021 and it had already gone up to 3.39%, although we negotiated hard to get it back down to 3.19%. We broke everything, including some lower rates, and went all in at that level. Even if rates ended up going lower we figured it was good enough for us.
I took those rates :)
People on here saying "don't fix, the banks are going to start paying you to borrow"
Same people who still havn't bought property, just on here ragging on how its all to hard.
And I own a house, 4 apartments and im building another 8 apartments.
Hardest part is just getting starting, then its just time in the market, pay down debt and borrow more when they let you.
If they dont let you borrow you should take there advice!
"... there may be some embarrassing complications in store if the button is pressed too early. "
Not really. What is likely to happen is pretty well understood.
The only question is which of the scenarios will play out. The longer the RBNZ leaves the easing cycle - the higher the 'unpleasant' scenarios rise in probability.
Harvey's idea of a sick economy is unsold inventory keeps piling on thus putting his 10% price rise by years end at risk. As a leading Spruiker, I seriously doubt individuals financial/emotional struggles are in his viewfinder.
It's therefore obvious both yourself and Harvey have dodged the point.
With any luck rates will never go anywhere near the lunatic low levels they were at during and after covid. Look at the consequences that were are now suffering.
I would hope that after about 6 to 12 months that they start very quietly reducing rates.
I would hope that there would be sustained downwards pressure on house prices as they open up building material imports and land supply.
I would hope that limited immigration would maintain upward pressure on wages, the workforce would be redistributed to those sectors that are important and productive enough to survive while those that are not, wither, I see this as a very prolonged period of up to 10 years as the economy re-balances to one based on high value and productivity driven endeavors, and house price to income ratios settle to to the more sane level of 3.5-5.
Interest rates would have to remain at levels in the just survivable pain region for a very long time and never return to ultra stimulatory levels, as they do very little other than stimulate out of control asset speculation with the consequences we are now suffering.
In a healthy productive economy increased productivity should be constantly putting downward pressure on prices so I don't see low or negative inflation as a problem. We need a more appropriate measurement to indicate when the economy is depressed and corrective actions that accurately address the problems without the low OCR realm and all it's misdirected and negative consequences.
What are the chances of this happening. Probably low to zero. National, despite my long held misgivings appear to have layed the foundations for what I have outlined. Unfortunately the lunatic fringe elements of their coalition risk an early collapse of their government and we shall return to an equally crazy left fringe skewed government. It would be great if both National and Labor could agree on something like what I have outlined, communicate the path forward very clearly to the public in a government of national unity that opposes the political extremities.
From another article where similar points were raised ...
"How about reducing demand by limiting the amount of people coming into the country. Could that work?"
Yes it could. But the consequences in the shorter term are less than desirable. Consider the following:
Production = Land + Labor + Capital + Entrepreneurship.
If Labor is constrained, then for the same quantity of Production, one of the other factors needs to increase. NZ is recognized for having low productivity because we throw extra bodies at increasing production rather than increasing any of the other three - and most agree that the main one in which we're lacking is Capital. (Studies bear this out.)
Thus by constraining Labor - NZ businesses would need to invest (use Capital) to increase Production. (Note that it may not just be using money to buy new plant and machinery, it may also be paying for the training of workers.) NZ Inc's productivity would be forced to rise as it is measured on a per worker basis.
Alas - in the short term - almost all businesses in NZ would be forced (through a dearth of Entrepreneurship) to pay workers more and the wage / price spiral would result in inflation.
And on how the RBNZ is changing how they measure 'labor' pressures ... (Similar vane but different).
Finally got round to reading the RBNZ analysis...
Link: https://www.rbnz.govt.nz/-/media/project/sites/rbnz/files/research/asse…
The fact that the RBNZ is placing weight on the NZEIR Quarterly Survey of Business Opinion (QSBO) for "labour as a limiting factor" is greatly concerning.
Consider that Production = Land + Labor + Capital + Entrepreneurship.
Note: if Production is constrained, Prices can rise, i.e. inflation.
Thus for the same output (Production), one factor, say Labor, may reduce if one (or more) of the other factors increases, say Capital.
NZ Inc has a very real problem with productivity - it is way lower than our peers.
And one observation - confirmed by empirical studies - is that NZ Inc. has a lower employment of Capital than our peers. I.e. we instead increase one of the other three factors to increase production. And in NZ this is most usually Labor. i.e. "throw another body at the job".
Thus when the NZIER asks whether the supply of labor is "limiting production", it isn't getting much of an answer to anything as the other 3 factors need to be weighed at the same time.
But what is incredibly interesting is that is that when labor is in a sustained period of short supply, businesses in NZ tend to invest more Capital into production. Simple example: It would take six men three days to dig a ditch, but a digger and driver could do the same job in less than a day.
Thus - when labor is being reported as a ""limiting factor" it becomes a far less useful figure without knowing whether the use of Capital (e.g. buying a digger and training a driver) couldn't be used instead.
A further issue in NZ is that we need sustained periods of Labor being in short supply before NZ business managers (Entrepreneurship) get around to investing more Capital into the production process. One suggested reason for this is the boom/bust business cycle in NZ. (Looking at you RBNZ!)
Going back to our low productivity - a suggested reason - and one I believe is significant in NZ's economy - is that by raising the OCR the RBNZ creates a double whammy by:
1) driving people out of work which make Labor more abundant and constrains the price of Labor, while at the same time,
2) raising the cost of Capital (and the risk of using it when the RBNZ wants to create a Recession!) meaning it becomes more expensive (and risky) for businesses to adjust the parameters of Production equation by using more Capital.
At times when Business Opinion is reporting Labor is becoming a "limiting factor", the RBNZ should instead be looking at encouraging the use of Capital to increase Production to starve off Inflation. Do they do this? I've seen ZERO evidence!
So once again we can see that the OCR is a pretty hopeless tool as it simply embeds low productivity through low capital investment into NZ Inc. every time the RBNZ uses the OCR to lower inflation.
The above comment is posted here: https://www.interest.co.nz/economy/126988/research-reserve-bank-suggest…
How does the OCR embed low productivity?
Monetary policy does precisely what it is designed to do to control inflation. The inflation cycle is when too much money supply chases too few goods, so people bid up the price of those goods. RBNZ increases the cost of capital and the benefits of savings. Predominantly wealthier people stop bidding up the price of those goods and instead turn their attention to their savings. And so on.
The path through this recession is not financial faux-austerity (true austerity is cutting spending and raising taxes, but I digress), it is wise fiscal policy to continue investing in the infrastructure and capital we will still need after this Government-imposed recession is over, which will only end when inflation is back in the target-band and interest rates start coming down.
I'm usually not a fan of blaming people over systems, but we have poor capital investment because of poor private capital investment decisions when credit is cheap and poor public capital investment when credit is expensive. I'm only going to mention in passing the fact that the current OCR is LESS than the long-term average.
Low productivity is embedded because most Kiwis do not invest, when the OCR is low, in Capital and Entrepreneurship that support Production models that are still profitably productive when the OCR is high but instead speculate on the value of Land and their own future Labour.
The current Government exemplifies this Kiwi way.
In short, bad economic decision-making embeds low productivity.
I'm usually not a fan of blaming people over systems, but we have poor capital investment because of poor private capital investment decisions when credit is cheap and poor public capital investment when credit is expensive.
Now you're getting somewhere. But why then are there these poor private capital investment decisions? From my experience it is culture really. How many businesses will invest in training and keeping their employees when most of the time they are expendable, and another can be hired to replace them. The are left to take their own initiative to develop vs the business forking out resources for it. New productive machinery? Why risk it when you can get 3 workers on minimum wage to do this and f things turn south you are able to drop them and not be left with higher interest rates on the credit you used to invest in said machinery you could have bought. This leads to employees feeling less valued and being less incentivised to be more productive, when it is well known now that changing jobs is the best way to increase salary and experience.
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