Kiwibank strikes first

Personal Finance

The state-owned bank is the first out of the blocks with a sharply lower home loan rate offer following the latest RBNZ monetary policy indication

27th Mar 19, 4:39pm by David Chaston

Kiwibank has rushed out a big fixed rate mortgage cut.

Despite the Reserve Bank holding its OCR rate unchanged at 1.75%, the tone of that announcement is decidedly dovish.

And that signal is energising wholesale markets, both the exchange rate market and the wholesale interest rate market.

And now Kiwibank is bringing that into retail rate offers.

It has announced it will be cutting its 5.09% five-year fixed mortgage rate to just 4.29% on Monday, April 1. That's an 80 basis points reduction.

It is also the lowest five-year rate ever (the previous low was 4.79% offered by ASB in 2016), and is easily the lowest five-year rate offered by any bank at present.

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 April 1, 2019	%	%	%	%	%	%	%

ANZ	4.99	4.05	4.19	3.99	4.49	5.55	5.69
	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
	4.99	4.05		3.99	4.49	4.99	4.29
	4.99	4.05	4.09	3.99	4.59	5.29	5.49

	3.99	3.99	4.29	4.29	4.49	4.89	4.99
	4.85	3.99	3.99	3.69	4.39	4.89	4.95
	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

Select chart tabs

Source: interest.co.nz

Source:

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23 Comments

by Narrabeen Boy | 27th Mar 19, 5:12pm 1553659967

Wow!!!!that's amazing news for borrower's.

by linklater01 | 29th Mar 19, 7:25am 1553797505

N B,

Why did you put an apostrophe in borrowers? As the plural,it should not have been there.

by Laminar | 27th Mar 19, 5:32pm 1553661167

@Bobster it doesnt look like rates are going up rapidly and banks arnt calling in loans yet, can you update please on the rapid gain in rates thats coming?

by Houseworks | 27th Mar 19, 5:52pm 1553662337

Didnt nic bang on that interest rates were definitely rising and those with borrowings would face tough times

by Shoreman | 27th Mar 19, 6:29pm 1553664579

Houseworks - Indeed what alot of hot air Nic had to say, the norm for interest rates is low low low, we don't have an inflation problem like we have had for near on 50 years so there is no need for them to be high. Still along way to go to match rates in the northern hemisphere. Term Deposits are going to look even less appealling !

by Fritz | 27th Mar 19, 7:16pm 1553667366

That guy has no idea I am afraid

by HeavyG | 27th Mar 19, 9:52pm 1553676776

Yep, and Westpac must just about be ready to go into liquidation as per Nic's foretelling. $1B profit 2018 then bankrupt in 2019. Nic-tradamus knows all and sees all.

by Shoreman | 27th Mar 19, 6:32pm 1553664776

Houseworks - Yes Nic talked alot of hot air, the norm for interest rates is low low low. Inflation is not a problem so there is no reason for high rates. TD rates are going to look less attractive.

by Alter Ego | 27th Mar 19, 7:40pm 1553668801

Oh...so Banks do not need a back stop........just lend willy nilly....with nothing in Reserve???.

Print and be damned....Capital...I say.....Will you bet your House on it....or will we just import Dollars from overseas, via China again..

by Shoreman | 27th Mar 19, 6:37pm 1553665020

Personally I do like this new idea that comments are checked before going on line, hopefully the focus can return to the subject in hand rather than personal attacks and agenda's thankyou Interest.co.nz

by fat pat | 27th Mar 19, 7:59pm 1553669990

Yeah it’s great, people should really think twice before commenting, about the political and economic persuasion of any particular author, so as not to offend!

by Brock Landers | 28th Mar 19, 12:51am 1553687475

There is no greater crime than somebody being "offended".

by fat pat | 29th Mar 19, 3:52am 1553784746

Yep, mine was a tongue in cheek comment. I'm actually pretty worried about censorship of the internet. The EU just passed articles 11 and 13, A link tax and upload filter which some regard as the death of the internet. Our government recently signaled it's intention to filter the the internet. Even interest.co.nz new comment approval is the thin edge of the wedge. Where does it stop? filtering based on political bias?

by MisterB | 27th Mar 19, 8:05pm 1553670318

It's a good rate, but it's questionable whether many will want to fix for 5 years ... you know, they say 1 is the new float.

But on a technical front David - why have you updated the table with the rate? It is not their 5 year rate until Monday 1 April. That's the time their 2 year special ends too.. right now it is still 5.09%

by David Chaston | 27th Mar 19, 8:10pm 1553670638

Our service updates rates as soon as we know they are changing. Sure, the institutions usually don't want us to change until they are official. We do respect formal embargoes, but we are a service for readers, and think readers would want to know what the upcoming rate change will be - on the grounds they are using the information to make a decision about the future (near as it may be).

by MisterB | 27th Mar 19, 8:36pm 1553672168

Sure, agree people should know the rate is changing and the article explains that well, but it's incorrect to say in a current rate table that this is their rate.

I see the rate table now says as at 1 April - so for consistency sake, you would need to remove the 2 year rate since that is advertised to end on 31-03 (not that we know what the new rate will be)

Same issue with the TSB rate - 3.99% is not their 2 year rate. Sure, if you ask, they'll give it to you under certain conditions of their rate match (if you purchase a resi property, not if you refi) ... but you have to ask, it's still not their rate. Not sure that's fair.

by David Chaston | 27th Mar 19, 8:46pm 1553672779

That table always said April 1 - it started that way.

by Squishy | 27th Mar 19, 8:49pm 1553672960

Was about to say the same thing.

With such a burden from residential household debt our economy now only appears functional with a flat or declining OCR.

by Fritz | 27th Mar 19, 9:17pm 1553674623

Yes we are the servants and low interest rates are our masters. That's what happens when you let asset prices balloon out of control

by Davis84 | 27th Mar 19, 11:21pm 1553682070

Fascinating to see how this progresses and the unfolds. Constant record low interest rates coming from across the board as we head towards May. As a 30 something with two young kids it would be amazing to see interest rates align with those in Europe. (2 years fixed around the 2-3% mark) How low can the OCR go?
A good time to have a floating mortgage and to wait until May?
Realistically are we looking at rates below 3% before the end of 2019?

by Leverageup | 28th Mar 19, 10:13am 1553721195

As a 30 something with one kid and a mortgage (that i would prefer to be lower) i couldnt think of much worse. For interest rates to get to that level, you would see an economy that is performing very poorly, needs massive stimulus and has high unemployment/poor job prospects. Not to mention the fact that lower interest rates will distort asset values even more.. driving ever greater numbers to plow all they have into property. All round bad news

by Nzdan | 28th Mar 19, 5:59am 1553705989

Will this necessarily translate into mortgage rate drops though? The OCR can influence but doesn’t automatically set mortgage rates.

For mortgage rates to drop, term deposit rates will also need to drop. How low can TD rates go until retail investors seek a better return elsewhere?

by Laminar | 28th Mar 19, 12:15pm 1553728557

The RBNZ discount window has no limit so they have almost total control over the short end and good control of the mid terms and some control over the long term as arbitrage will occur between the short and long end as RBNZ drops the over night repo rates. This repo rate is 0.5% above OCR which means no one will want to pay more than that for cash.
Failure to pass on the discount on mass would constitute anti-competitive behavior and the RBNZ does from time to time threaten this charge.