It is a new week and now BNZ falls into line with a 3.99% two year fixed mortgage offer. That only leaves ANZ as a holdout among the majors. And now two year swap rates are falling too

It is a new week and now BNZ falls into line with a 3.99% two year fixed mortgage offer. That only leaves ANZ as a holdout among the majors. And now two year swap rates are falling too

BNZ is the latest bank to offer a sub 4% fixed mortgage rate.

They have cut -30 bps from their Classic two year rate taking it to 3.99%.

That matches five others (including ICIB which has a 3.99% one year rate); HSBC Premier is offering 3.69%.

Now those that aren't offering a sub 4% rate are fewer - just three. And the main holdout is ANZ.

The two smaller challenger banks, Co-operative Bank and SBS Bank, are trapped in a margin squeeze because they are almost only fully-funded by customer deposits.

BNZ has also taken -20 bps from its standard two year rate, which is now at 4.59%.

Westpac was the previous mover.

The adoption of 3.99% for the BNZ Classic two year rate takes the average bank two year rate down to 4.02% and only held above 4% by the ANZ stance with its carded offer.

Swap rates have opened sharply lower today, following Friday's bond rally (fall in yields).

Since the beginning of February, wholesale swap rates had moved little at the short end of one and two year durations. The one year swap rate were down only -6 bps and another -4 bps fall has occurred for two years. Since the beginning of 2019 the fall is -10 bps. More details of the benchmark moves are here.

But today's drop in swap rates includes the two year, and early quotes show it has fallen -5 bps.

But the main cost driver for banks is their cost of deposit funds. While these have slipped minorly at a handful of banks (about -5 bps) for most, these haven't moved at all. Given that more than 70% of bank funding is based on retail deposits, this doesn't support lower costs and therefore lower mortgage rates.

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 March 25, 2019 % % % % % % %
ANZ 4.99 4.05 4.19 4.29 4.49 5.55 5.69
ASB 4.95 4.05 4.19 3.99 4.49 4.95 5.09
4.99 4.05 4.79 3.99 4.49 5.19 5.39
Kiwibank 4.99 4.05   3.99 4.49 4.99 5.09
Westpac 4.99 4.05 4.09 3.99 4.59 5.29 5.49
4.05 4.05 4.29 4.29 4.49 4.89 4.99
HSBC 4.85 3.99 3.99 3.69 4.39 4.89 4.95
HSBC 4.99 4.05 4.25 4.29 4.49 4.99 5.09
4.85 4.05 4.09 3.99 4.49 4.95 4.99

In addition to the above table, BNZ has a fixed seven year rate of 5.95%.

Fixed mortgage rates

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Taking up a 2 year fixed term at 3.99% was a no-brainer action to take. The competition between the banks is exceptional right now, and I'm wondering how long they can keep this up.

Do they have much of a choice? If Auckland house prices keep falling and more people decide to wait and see if they go lower, how else are they going to keep momentum? Quite a few FHBs are already looking at negative equity after catching a falling knife.

Hi Voiceofreason,

You are overstating matters: there is, in fact, very little movement in Auckland house prices at present. In some areas, prices continue to climb.

You ought to keep abreast of the data - including that provided in this website over the last fortnight or so. For instance, the latest evidence reveals that lower-priced houses in Auckland show a significant upward price movement.


Heard from a person whose friends bought in Hobsonville for 1.1 million at the peak and have just seen their neighbours in an identical house have to settle for $900k. FHBs can be excused for not rushing into such a situation of potential equity loss.

My father's sister's daughter spoke to a friend whose brother's father's mother heard from her neighbour that a house bought for $900k at peak just sold for $1.1m to a FHB couple. Why wouldn't you buy at current interest rates?

Why wouldn't you buy at current interest rates?

Because despite your made up example the REINZ HPI for Auckland was down 2% year on year last month, Sydney is down, Melbourne is down, and record low interest rates aren't succeeding at holding up the Aussie markets...?

Those are a couple of reasons anyway. With Auckland's stratified index down 2% year on year despite record low interest rates...they might be better off waiting to see if prices continue coming down like they have in Australia.

In Australia people are realising their equity has disappeared, and banks are questioning the source of deposits to see if people can really save or not.

That's consistent with what I wrote here a day or two ago. A lot of properties around that price range dropping that much.

Sorry, a correction from me. I’ve just realised I made a typo above and meant to say, quite a few *Sydney* FHBs are now in negative equity after catching a falling knife. No, that hasn’t happened in Auckland quite yet, but those aware of what’s happening in Australia will be thinking of waiting.

I am wondering how low they can go myself.

dictator, I prefer 1 year at 3.99% because of the flexibility

Gotta keep that party going man!

And to think a while back people were talking about how rates are going to go up.

I don't reckon interest rates can ever really go up in any significant way, because if they do, NZ Inc will be under water.

The pressure was on for higher rates, but as we've seen the Fed's program has run aground with the increased rates combined with balance sheet reduction being too much for the US to cope with. Mix that in with a possible recession there's no hope of the rates going up in the near future.

For now enjoy the lower payments. It's cheap use of money.

agreed the world debt is now much much bigger than before the GFC, and who would be silly enough to push their country into a recession or even worse start a world recession by raising rates.
even the FED will start to lower soon.
we will never see rates as high as 7% for a long long time

Here's a dedicated sale pitch:
Lock up a 2 year fixed term at 3.99%, look hard and take the opportunities to buy under true value especially in the fast growing Christchurch.
All the positive signs are all there, what can go wrong really?
Oh by the way, make sure it positively geared!

Chairman, you have finally caught on!
This site is for discussion to assist people to make financial decisions.
There are far too many people that post that have not done terribly well financially and therefore are property bears.
They have been stating that the property market is overpriced and needs to drop substantially, and yet many have been saying this for more than 6 years.
There needs to be a more balanced view or position shown on
The fact that it hasn’t been balanced has certainly cost many people a lot of money.
Property investment done correctly is very hard to beat!

Never say never. Sep 2008 bank floating rate was 10.64% !!! As my grandfather used to say, always plan for the worst case scenario, then nothing will ever be "bad" !