Another bank tweaks its rates for longer term fixed home loans, adding a new market leading rate while holding on to another. It cuts term deposit rates at the same time

Another bank tweaks its rates for longer term fixed home loans, adding a new market leading rate while holding on to another. It cuts term deposit rates at the same time

Kiwibank has trimmed two home loan rates, and raised a third one.

The State-owned bank has cut -40 bps off its previously uncompetitive fixed three year 'special' carded rate taking it down to 4.09%. However it is still +14 bps higher than the three year 'special' offers from ASB, BNZ and Westpac - and those big Aussie banks are being matched by TSB. The market leading three year rate is the 3.90% offer by China Construction Bank.

However, the -70 bps cut it made to its four year rate was enough to give it a market-leading position for that term. Kiwibank's new 4.29% fixed four year rate is -6 bps lower than that offered by ASB, Westpac and TSB currently.

Kiwibank already had a market-leading rate for five years, one that has been in the market now since March 27. In the subsequent almost-3 weeks, no other bank has matched that, a rate that is pitched far below any rival. So today it has raised this rate by +10 bps to 4.39% and even after this change it is still market-leading.

Kiwibank 'specials' just require at least 20% equity, and are also available for Welcome Home Loan customers.

At the same time, Kiwibank has cut term deposit rates, especially those of two years and longer.

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 9, 2019 % % % % % % %
               
ANZ 4.99 3.95 4.19 3.99 4.19 4.85 4.95
ASB 4.95 4.09 4.19 3.99 3.95 4.35 4.45
4.99 4.05 4.79 3.99 3.95 5.19 5.39
Kiwibank 4.99 4.05   3.99 4.09 4.29 4.39
Westpac 4.99 4.05 4.09 3.99 3.95 4.35 4.45
               
3.99 3.99 4.09 4.15 4.35 4.59 4.69
China Construction Bank 5.15 5.10   3.65 3.90    
ICBC 4.85 3.99 4.19 3.99 4.49 4.95 4.99
HSBC 4.85 3.99 3.99 3.69 4.39 4.89 4.95
HSBC 4.99 4.05 4.25 3.99 4.49 4.99 5.09
 with price match promise 4.85 3.95 4.09 3.99 3.95 4.35 4.45

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

Fixed mortgage rates

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9 Comments

Sounds like a marketing gimmick really. KB can appear to be market leading and get a few headlines, but at no real cost as no one would fix for 4+ years @ 4.29 when you can get 3 years @ 3.95.

How low can you go? (-;

No fun for holders of bank term deposits.

My view is that managed funds are now a much better bet than term deposits - even for the risk averse. Most managed funds seem to be reasonably liquid.

TTP

It seems they actually put the rates UP effectively, by swapping the 5yr for the 4yr term and not even matching the market on 3.

And they dropped TD rates... so must be chasing some margin, after starting this round of cuts themselves.

Managed funds! Aren't you just paying for your fund managers yacht? What about ETFs. I suck at investing but anyway I've got a bunch in Squirrel earning around 6.5 % (nice because you can put quite a lot in at once). Got some stuff on the NZX with Direct Broking. Got some dough over to Germany using TransferWise then invested with degiro. Degiro is a share brokerage company which only charges about 2.3 euros brokerage!! and zero custody fees!!! Time will tell but hopefully I can outperform a managed fund.

Comparing 4.29% for 4 years to 3.95% for 3 years: with the 3 year rate you are 0.34% better off per year for the first 3 years so about 1% better off after 3 years (this is ignoring principle payments which make the 3 year rate even better still). Which means the only way the 4 year rate works out better overall is if interest rates have gone up to over 5.29% in 3 years time. Its possible I guess, but a bit of a gamble...

According to TSB's website, the price match promise only applies to resi property purchases (evidently excludes refinances or top ups).. and only if you ask the branch or MLM. Wonder how many dont ask? Has anyone tried to get it on refinance or top up? Seems mean. Do they match any cash incentives too?

Most, if not all banks, will give their website carded rates first. If you ask for them to price match, or for better rates, they often will be able to. I'd imagine that customers of TSB are no different to customers of other banks, with a large chunk of customers accepting the carded rates without hassle

The difference here being that interest.co.nz updates TSB's rates as though they had changed and mentions their price match in every article about every change. Maybe gets commission? Seems odd, when in practical terms, all banks will likely match. If TSB want to actually offer a market leading rate, they should change their rate, like Kiwi did/does.

Be warned Kiwibank has one of highest most complicated break fees.