New Zealand's largest mortgage lender pushes its one year home loan rate offer to a new all-time low, challenging its rivals on price

New Zealand's largest mortgage lender pushes its one year home loan rate offer to a new all-time low, challenging its rivals on price

ANZ has trumped its rivals with a new low one year fixed mortgage rate offer.

It has tweaked its 4.19% 'special' rate down -4 bps to 4.15%.

Apart from the 3.99% HSBC Premier offer for the same fixed term, this is now the lowest bank rate in the market and sure to attract the attention of its rivals.

ANZ is the largest home loan lender in New Zealand.

At 4.15%, this is the lowest one year fixed rate the bank has ever offered.

No other changes have been announced with this one (although their standard one year rate was also reduced by the same -4 bps to 4.65%).

And this announcement doesn't come with matching term deposit rate reductions.

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 October 1, 2018 % % % % % % %
4.99 4.15 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 4.19 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 4.19 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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I would love to know if some of the reductions are coming at the expense of "discounts" that banks offer customers.

For example, if a bank was previously willing to offer a 20bps discount to a bigger customer, are they still willing to take 20bps off the carded rates now or is the rest of the market just getting access as competition increases? Along the lines of David's article the other day "mortgage rates offers drift into a bunch".

ZP, good question, I can answer that question as I have been an ANZ borrower with multiple loans for many years (formerly National Bank). You are right, the larger established customers are getting less of a discount compared to new customers. As a concrete example I used to get discounts of 0.6% over carded rates, now I got 0.2% in September for a 1 year fixed loan (I got 3.99% carded was 4.19%)

Thanks Yvil

Your discounts in question may be just the way the banks look at rates currently. Previously you could get large discounts on the standard rates, around the 0.6-0.8 range. Currently you are still getting the same level of discount, however it appears lower as the bank has a 'low LVR special' that most customers qualify for. If you look at your rate of 3.99% P.A it is still a 0.7 discount, as the standard carded rate would have been 4.69% P.A at the time.

In regards to the earlier question; when banks reduce their standard and special, typically the level of extra discounts that can be applied on top of this are reduced, so the actual bottom line they may be willing to give is not majorly changed (at least initially). However, now that ANZ has dropped their 1 year rate then potentially each other bank may have further discretion to match this rate or go even lower, that will not be noted on their website. If another bank drops their rate to 4.1% P.A for example, then ANZ may begin to match that rate (or even lower rates) without shifting the advertised rate.

interesting that they are going lower and lower in an effort to find customers,

Well it's the same with The Warehouse or Briscoes etc, the banks need to sell their products so they lower their prices

Such discounts sometimes precede a closing-down-sale ..

Just being cheeky lol =)

I wonder if those longer term rates are finally starting to become a reasonable option?
4.99% for 5 years might work out fairly well if we do get some inflation from minimum wage increases, fuel price increases, etc. If I were to fix now I would consider fixing half my mortgage at 4.99%.

Good long-term rates indeed but very inflexible. You can only repay max 5% principal pa or early repayment fees are very high if your circumstances change and you need to repay or refinance.

That depends on the Bank. I am pretty sure that ASB lets you pay an extra $1000 p/m on top of your normal payments (for each loan) - although you have to keep that repayment up for term. That would be more than 5% of principal depending on the loan size (but you could structure as multiple loans)

indeed, the ASB allowed extra payments are per loan. quite handy.