Kiwibank cuts one-year mortgage rate

Personal Finance

Kiwibank drops one-year 'special' mortgage rate to equal lowest advertised rate for the term from a bank

17th Aug 18, 12:23pm by Gareth Vaughan

Kiwibank is cutting 20 basis points from its one-year "special" mortgage rate, dropping it to 3.99% from Monday.

That makes it the equal lowest one-year advertised rate from a bank, alongside HSBC's "premier" offer.

Kiwibank's special requires a minimum of 20% equity. The bank's standard one-year rate is 4.49%. Kiwibank's specials are available for Welcome Home Loan customers.

The state owned bank's rate cut follows one earlier on Friday from Westpac, which trimmed 60 basis points off its five-year "special" rate dropping it to a market leading 4.99%.

The trading banks' mortgage rate cuts come after the Reserve Bank last week indicated the Official Cash Rate won't be moved from its record low of 1.75% until 2020. Following this announcement wholesale swap rates tumbled. The latest Real Estate Institute of New Zealand monthly sales figures out on Wednesday showed a soft Auckland housing market with the median price of $835,000 below where it was two years ago, and the median days it takes to sell rising.

See all banks' carded, or advertised, home loan interest rates here.

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28 Comments

by bw | 17th Aug 18, 12:47pm 1534466852

This is beyond attracting new business. It's about keeping existing clients who are migrating to "P&I" from Interest-Only afloat. Give them 3.99% for a year to sort things out, and have another look. Other banks to follow, and lower rates on the horizon if 'things' don't improve.

by Yvil | 17th Aug 18, 12:49pm 1534466941

Great news

by Nic Johnson | 17th Aug 18, 1:08pm 1534468122

Race to the bottom. Got to make debt cheaper because without 'Johnny Foreigner' to get people out of a hole, there is only local debt to prop up the Ponzi.... Quick signs of panic from Kiwibank and Westpac... How do they place on the Reserve Banks stability table?

by Advisor | 17th Aug 18, 1:13pm 1534468426

Wholesale borrowing costs up, compliance costs forced up, retail rates down, fees & charges forced down - how will our banks continue making thick margins to feed back into the government purse or to their Aussie parents?!

by Eco Bird | 17th Aug 18, 1:24pm 1534469060

It is Good news ... Loan amounts will shrink a little and buying might just become more affordable as we go, and loan repayments will fall a bit.

However, This will create additional demand -- cheaper money leads to rising House prices. ... Just in time for Spring

by Retired-Poppy | 17th Aug 18, 1:45pm 1534470350

Eco Bird, agree its good news but, when this latest wee burst of adrenaline wears off, what then? Raising overall living standards via much higher wages is more sustainable. Till then, at best, the dead cat may deliver another little bounce although, tighter lending standards might prevent a bounce and for the time being only serve to cushion the current decline. Time will tell.

by Advisor | 17th Aug 18, 1:53pm 1534470814

How is this any different from Chinese banks trying to breathe some life back into a rapidly cooling Chinese economy with cheap credit - both these cases involve solving debt and overvalued asset crises with yet more cheap money and asset inflation.
The only long-term solution is real economic growth from productive sectors lifting wages and a regulatory restructure to drive capital away from property speculation into growth assets.

by MisterB | 17th Aug 18, 1:38pm 1534469902

Wow, aggressive! Their 1yr TD is 3.45%... how can a bank be run on 0.54% spread? Thanks, tax dollars. Guess TD rates will drop.

Seems odd that it's on interest.co.nz before their own site... wonder if that was an 'oops' moment?

by Retired-Poppy | 17th Aug 18, 1:57pm 1534471040

MisterB, TD rates have got to be heading down, there's no other way of looking at it. How far these drops go depends on the climate. I think if deposit funds start heading overseas then, banks will be forced to compete to retain the required level domestic deposits. I understand a very large proportion of household deposits are parked for terms less than 12 months.

by Small Kev | 17th Aug 18, 2:14pm 1534472087

This is just a start.
Banks that offers best 1 year rate will win businesses in the next couple of years.
One year fix is the new floating. Been doing that for that last 4 years.

by Hardly | 17th Aug 18, 3:09pm 1534475381

Yeah it took me a while to catch on but now I just roll over year to year. I don’t know why floating is so high.

by Yvil | 17th Aug 18, 5:19pm 1534483189

Well said Small Kev

by MortgageBelt | 17th Aug 18, 5:28pm 1534483728

3.x % rates will be coming from the other banks soon.

by THE MAN 2 | 17th Aug 18, 6:38pm 1534487907

Interest rates were meant to be going up I was told on interest.co
Bought an investment rental yesterday at auction so return is going to be great.
If you are not into buying positively geared rental property then you are missing out big time

by Nzdan | 17th Aug 18, 6:34pm 1534487645

The only auctions they have down in Christchurch are through Turners/Mannheim. Are you sure you didn’t stumble on a crowded flea market?

by THE MAN 2 | 17th Aug 18, 6:40pm 1534488036

The only flea is you, with that stupid comment.
Pretty pointless thing to say NzDan when this is a site to discuss financial things and the best you have got is that?

by Nzdan | 17th Aug 18, 7:01pm 1534489282

Did my comment make you “tick”?

by Nzdan | 17th Aug 18, 7:21pm 1534490498

You know, if I were as successful as you try to make yourself out to be every day on this website to a bunch of strangers, I’d be spending my time with friends, family and doing things that I enjoy.

Do you not have friends or hobbies?

by THE MAN 2 | 18th Aug 18, 8:54am 1534539250

I spend most of my time with my wife, and we do most things together, as a team.
A few great friends is all Imneed.
We travel a lot as well.
A great life thru investing well, and the thing is that so many can be financially independent thru property if they take correct advice from people that know.
Being on Interest.co and listening to all the Doom and Gloom merchants hoping that house prices drop and investors get burnt will get you nowhere.
Take responsibility for your own actions!

by blue meanie | 18th Aug 18, 9:57am 1534543051

“Take responsibility for your own actions!” So what you are saying is we all should go out and bludge money from hardworking Kiwis so we can live the life you lead? Yeah nah matie.... some of us have a moral compass and getting financial gain from someone else’s pain just ain’t it.

by Nzdan | 18th Aug 18, 12:02pm 1534550523

Does she comment on here too?

by THE MAN 2 | 18th Aug 18, 12:01pm 1534550472

Blue Meanie, I think calling me a bludger is a bit on the nose to be fair.
We provide quality shelter for people that want to rent a quality home for whatever reason.
Nothing moral in it at all, we are running a legitimate business.
So you are saying that you would rather work 40 hours in a day in a factory than be financially secure and being able to pick and choose what you do and where to holiday???

If you are saying that then you are seriously deluded! !

by blue meanie | 18th Aug 18, 1:42pm 1534556526

Just because something is legal, doesn’t make it moral. Your stumbling into generational luck as boomer and being able to buy property for nothing, doesn’t mean the rest of us aren’t able to choose another career and actually enjoy what we do. But the fact you somehow feel you are more important and ‘special’ than a factory worker because you now bludge money off hard working Kiwis, does say a lot about you. No doubt this ‘special’ status you have will give justification for you to take more of your tenants hard earned money, because they aren’t as clever as you.
Your presumption I and other non-slumlords are unable to provide a good existence for ourselves and our families is both obnoxious and offensive. You know nothing about me, other than I am appalled at your contempt of hard working Kiwis. I can assure you, I have travelled more, been to more places and seen more than you can possibly dream of and all without rorting money from law abiding citizens.

by Nzdan | 18th Aug 18, 2:59pm 1534561151

I just don't understand why someone who claims to be a successful Landlord feels the need to tell strangers on a website about it, multiple times per day. Normally when someone seeks gratification online it's because they don't get it in real life, either because nobody cares or because the claims are false.

by THE MAN 2 | 18th Aug 18, 3:33pm 1534563210

The reason is that I like to help people improve their financial circumstances thru property investing done right
The thing is that interest.co seems to have far too many contributors who just grumble and groan about house prices in NZ
The reality is that I tell it the way it is and that there is money to be made in property providing you know what u are doing
I just point out facts and whether anyone takes notice doesn’t affect me personally but to ignore my advice will not improve your financial circumstances
Yes We are satisfied with our investing in property that has given us financial security and a great lifestyle which can be achieved by others if they are prepared to listen

by Zack Brando | 19th Aug 18, 1:35am 1534599334

I'm sure you're very charitable and virtuous THE MAN 2, but reading your comments did bring to my mind the following parable lol:

“The ground of a certain rich man yielded an abundant harvest. He thought to himself, ‘What shall I do? I have no place to store my crops.’

“Then he said, ‘This is what I’ll do. I will tear down my barns and build bigger ones, and there I will store my surplus grain. And I’ll say to myself, “You have plenty of grain laid up for many years. Take life easy; eat, drink and be merry.”’

“But God said to him, ‘You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself?’

“This is how it will be with whoever stores up things for themselves but is not rich toward God.”

by THE MAN 2 | 19th Aug 18, 9:45am 1534628713

Zack, very fair, however we didn’t just work for ourselves.
We have worked to provide for our family so that they can have an easier life than ourselves.
We now have the time for ourselves and can pick and choose what we want to do each day, notvanswering to damn alarm clocks.
All I try to point out is that life is what you make it.
You can moan and grumble about not owning a home as much as you like but you have no control over that.
What you can control is what you do about it!
Think about how you can do things differently to make it work.
Opportunity in NZ is everywhere.
I hate reading about people not being able to afford a home but I guarantee that most bring it on themselves.

by CJ099 | 19th Aug 18, 10:10pm 1534673416

See this is what happens wen you allow a property market to run out of control under 9 years of National. Now to try to stop negative equity and thousands of mortgagees the banks have to drop their mortgage rates to allow salary wage earner to get in to massive amounts of debt to afford over inflated property prices.

So now that foreigners will find it much harder to buy a home here you'll start to see the much lower rates that the rest of the Western world has.

Take a look at the UK, some banks are offering around 1% mortgages, I kid you not look for yourself: https://www.moneysupermarket.com/mortgages/results/#?goal=3&types=1&typ…