Both BNZ and Kiwibank change fixed mortgage rates for one and two years to open the bidding for the new week, hard on the heals of HSBC's market leading challenge

Both BNZ and Kiwibank change fixed mortgage rates for one and two years to open the bidding for the new week, hard on the heals of HSBC's market leading challenge

BNZ has cut its one year Classic home loan rate by -5 bps to 4.05%.

And Kiwibank has ended its 3.99% two year 'special' reverting to the 4.19% rate it had prior to introducing the 'special.

These are the first two mortgage rate moves of the week and come after HSBC launched 3.95% rates late last week.

And they come after wholesale swap rates fell to new all-time record lows at the end of last week.

The BNZ trim is not really very significant given that is to the same rate that most of its main rivals are on. The exception is Westpac which is maintaining its 3.99% rate for one year fixed.

The Kiwibank lift on the other hand still maintains a small advantage over its main rivals. The new 4.19% level is lower than the 4.29% rate for two years fixed that each of them have adopted. But HSBC and TSB both have lower rates for that term, especially HSBC who is offering 3.95% for one, two and three years.

The relentless fall in wholesale swap rates remains an interesting backdrop to these mortgage rate offers. While term deposit offer rates are the main limitation, those institutions who have substantial wholesale funding have the option to follow this wholesale market down. And that mainly affects HSBC, although the four big Aussie banks do have some as well.

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

Here is the full snapshot of the advertised 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 February 11, 2019 % % % % % % %
ANZ 4.99 4.05 4.19 4.29 4.49 5.55 5.69
ASB 4.95 4.05 4.19 4.29 4.49 4.95 5.09
4.99 4.05 4.79 4.29 4.49 5.19 5.39
Kiwibank 4.99 4.05   4.19 4.49 4.99 5.09
Westpac 4.99 3.99 4.09 4.29 4.59 5.29 5.49
4.05 4.05 4.29 4.29 4.49 4.89 4.99
HSBC 4.85 3.95 3.99 3.95 3.95 4.99 5.29
HSBC 4.99 4.05 4.49 4.29 4.49 4.99 5.09
4.85 4.05 4.19 4.25 4.49 4.95 4.99

In addition to the above table, BNZ has a fixed seven year rate of 5.95%. TSB no longer has a 10 year offer.

Fixed mortgage rates

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It is in the interest of banks to keep supplying mortgages.
After all it's money out of thin air that they can charge interest on, and thereby increase the money supply.
So perhaps a lower interest rate may give them less income, but it's still worth it to the banks in this ponzy debt/credit type of money system we've got.

I'm sure that by now most readers of have seen speeches by Prof. Werner.
He explains it clearly.

It's more than likely one of the reasons for the "housing bubble" we've got.
Keep pumping out mortgages is the banks motto IMHO.

The problem is that it keeps pumping up the house prices. If house prices don't rise, then they lend out less money. What they should be trying to do is increase margins, so not lending money out so cheaply

"ASB CEO Vittoria Shortt says 'huge agenda' of potential regulatory change could lead to price changes for bank customers & credit rationing"
Quite right, Vittoria.
It won't matter what the cost of funds is for 'new' borrowers - they won't be getting much anyway! It's all about the backbook. The banks are going to try to cannibalise each other to get The Good Customers to improve their established books, but there's only so many of those who will move. After that, it's about working with what they've got/been left with.

I better get my lipstick out, I'm a hussy when it comes to moving banks for the best "package";)

Interestingly I got a letter from BNZ today.
I have a dormant over draft mortgage facility (in event of need for quick funds).
The letter states that they see "investor property carries higher risk . . . . Going forward, there will be two interest rates for home loans: Residential Owner Occupied and Residential Investor," with residential investor rate higher than owner occupied.
I have been out of property investment for three years now, but over the past 20 plus years never experienced a differential between the two.
I see the fall out from the Australian banking investigations for NZ to be tighter credit, fewer interest only loans, and now investor/occupier rate differentials.
With all the negative changes relating to property investment - new (largely anti-landlord) legislation, healthy home requirements, low yields (4%), outlook for unlikely significant capital gains (and some likely risk of losses) in a flat property market, talk of a capital gains tax, ring-fencing property tax losses, tightening credit requirements, outlook for increasing mortgage interest rates, increased occupier/investor differentials, etc - the outlook for property investment is not great.
I see no sympathy for property investors from renters.
However, renters be "VERY, VERY AFRAID". RBNZ figures show significant fall off in investor lending which is likely to mean a future shortage of rental properties. And most importantly, it is only rent increases that will make property investment attractive. Sleep well renters. :)

Odd that you only just received that latter now, since they made that policy change in October last year. From their website:

"For all new lending entered into from 23 October 2018, we have two different interest rate types. Either a Residential Owner Occupied rate1 or a Residential Investor rate2 will apply depending on how your lending is secured."

If you look at the rates, the investor ones are basically 0.10% higher than the residential ones, so hardly any difference at all at the moment. It also applies if you have ONLY an investment property with BNZ; I have an investment + my residential home with BNZ and am paying the residential rates on both properties.

I have renewed 3 x 1 years mortgages (admittedly with ANZ) since October all starting with an interest rate of 3.xx% no difference between investment and owner-occupier loan, but you make an interesting point printer8

Thanks for that Lanthanide
As I am no longer a borrower, I don't take too much notice of mortgage rate issues.
OK, only 0.1% higher at the moment but the precipitant for a differential is there; so much easier in the longer term to increase. So like the renters, sleep easy for the moment but as you appear to be a longer term landlord you could be shielded from future problems.
A deeper concern of mine is the future for housing (rental and owner occupied) cost and supply.
Currently, and for the foreseeable future, it is no longer really attractive for property investment and RBNZ figures show a significant drop in the number of new mortgages for property investment - so the outlook is most likely to be fewer investors and a shortage of private sector rental properties. KiwiBuild looks to be a failure in addressing additional supply of low cost housing.
Current issues with housing are not being addressed and seem set to be an increasingly compounding and serious problem.

Back in the UK, there has been an interest premium if a property is rented out for many years. This reflects the fact that these properties are more likely to be ditched when the owner is in financial trouble compared to their own home. I believe that in the UK at least, the evidence shows there is higher risk in lending to investors vs. owner occupiers, all else being equal.

Side note - the other way that property investment could become more attractive is of course for property prices to fall.

Out of interest where are you investing now , term deposits ?

John2, Is that question of me?
If so, I sold my last rental property equally for the freedom to travel in my retirement and as I saw the housing market peak.
I have a half on bank term deposit (yes interest rates are at a historic low return but not too many retirees complaining) as much for security, and put the other half into KiwiSaver to use as a vehicle for exposure to the share market (which as I posted on 14 August) I shifted to a more balanced fund due to the likelihood of volatility. I also have a work related superannuation scheme which I draw on.
The previous hay-days of property investing have gone. I will only consider getting back into investment property but there needs to be a fundamental change in yields to make this worthwhile. The current 4% yield (less expenses) makes property investment - with the risks and considerable hands-on work - not overly attractive for the foreseeable future.

I got a feeling 3.95% is going to be the bottom they will level out at , but for longer terms than now.

I have another loan coming up for interest renewal on the 2nd of March, usually I need to contact the bank and ask them what interest rates they are wiling to offer me, interestingly, this time around, last week, my banking manager emailed me first and offered me rates valid until the 16th of Feb… Could rates still go lower?

Cant hurt to wait unless the rates are very sharp.Shop your rates around and see what you can get.

I know ASB have a policy that if better rates turn up prior to the renewal they give you the lower rate. Best to check with the bank before fixing as they may have a different policy, but it sounds like a standard offer template with the time limitation.

I believe all banks use RRA's

and who suffers? People that have managed to save money (against all the odds) are paying the price of the cheap money so people can over commit themselves?

That's true. We've saved a bit & are getting FA for it. But remember, our generation never had to go to war like my father's did or his father's did before him.

Next: mortgage rates of 3.49%?

Sounds doable.

Term Deposit Rate: 3.40%
2 Year Mortgage Rate: 3.49%