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