Kiwibank cuts more mortgage rates, tightening up bank offers across the board. It also trims a set of term deposit rates

Starting this week, Kiwibank has reduced three of its longer fixed home loan rates.

But none of these reductions push its offers to market-leading levels.

It has joined most of the main banks in offering 4.49% for three years fixed, in their case this results in a -36 bps reduction. But it has chosen not to match ASB's 4.39% offer for this term, which is the market-leading position.

It has reduced its four year fixed rate by -20 bps to 4.99%. That is 'competitive' with mpost banlks, but not as low as the offers from ASB, or SBS Bank (who has the market-leading four year rate).

And it has set its five year rate at 5.09%, a -30 bps drop. But again, this is not especially notable.

This is on top of the market-leading 4.19% rate launched last week (joining HSBC Premier, and SBS Bank). TSB was the next to follow.

In conjunction with these cuts, Kiwibank has also reduced its term deposit rate offers. Rates for nine months, 2, 3, and 4 years have been reduced by -10 bps. Rates for five years have been reduced by -15 bps. But, Kiwibank have raised its six month term deposit offer by +20 bps to 3.45%, a level that is notable in comparison with other banks, but actually lower than the 3.50% rate they were offering previously for a nine month fixed commitment - but has now been reduced to 3.40%. So it's an overall reduction.

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

Here is the full snapshot of the fixed-term rates on offer from the key retail banks.

below 80% LVR 6 mths  1 yr  18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
as at September 24, 2018 % % % % % % %
               
4.99 4.19 4.85 4.35 4.49 5.55 5.69
ASB 4.95 4.19 4.39 4.35 4.39 4.95 5.09
5.35 4.19 5.05 4.35 4.49 5.59 5.59
Kiwibank 4.99 4.19   4.19 4.49 4.99 5.09
Westpac 4.99 4.29 4.79 4.35 4.49 5.29 4.99
               
4.50 4.19 4.35 4.39 4.49 4.99 5.15
HSBC 4.85 3.99 3.99 4.19 4.69 4.99 5.29
HSBC 4.99 4.19 4.49 4.19 4.49 4.89 4.89
4.85 4.19 4.29 4.19 4.49 4.95 4.99

In addition to the above table, BNZ has a fixed seven year rate which has been reduced recently to 5.95%.

And TSB still has a 10-year fixed rate of 6.20%.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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14 Comments

More interest rate cuts to come, I'd say.

TTP

Indeed TTP.

In the short term it appears that demand for credit this Spring is oscillating downwards, hence the banks have put the 'for sale' sign up to tempt the market to have another bite of debt. Maybe the market has already had it's fill though?

Nic, cheaper credit but harder to access. Now that the FMA are eyeballing our banks, improved scrutiny combined with a evaporating capital gains has made way for a self fulfilling situation. Rates again near 60 year lows in anticipation of an epic global debt hangover.

Its the calm before a big sh-tstorm.

RP

There are a few similarities to the 2006/2007 period. Fed tightening (see below chart for rate increases June 2004-Nov 2006. (FED rates started rising June 2016 this time around so we're 16 months in now, ie October 2005 equivalent, more to follow over the next 18 months.

Oil price has also doubled since January 2016, (last time around it peaked in June 2008). it's on the way up again.

NB the previous spike 2010-2014 was a liquidity spike from excess QE. It's now rising in an environment where interest rates are going up as well.

https://www.macrotrends.net/2015/fed-funds-rate-historical-chart

https://www.macrotrends.net/1369/crude-oil-price-history-chart

There are plenty of homeowners refinancing/renewing mortgages - and the current downward trend in interest rates is giving them plenty to smile about.

TTP

Indeed, imagine the borrowers who were cashflow positive when interest rates were at 8.5%...

HSBC special 1 year and 18 month rates are currently 3.85%, not 3.99% as in the chart above.

All the main banks should be down to 3.99% for one year terms soon.

If that's the case, this is going to be an epic credit bubble.

Anyone taken out a mortgage recently? What deals are the banks offering?

One year fixed is the new floating, banks that offer the best 1 year rate will earn great business this summer.

Would look at the 2 or 3 year fixed mortgage if I still needed one and it was about to roll over within the next 6 months. Its the calm before the storm, expect rates to start rising in Q1 2019..

May I politely disagree with you. If you are right "calm before the storm" (I don't see it like that), then what happens in say 2 years time when you rate comes up for renewal? You could be facing much, much higher rates (again in your own scenario). If you really believe in the "calm before the storm" scenario, fix for 5 years.

Too much of a jump in the rate, thats an extra percent your paying for the 3 years for starters.