SBS Bank is joining the main banks offering 3.89% for one year fixed.
There have been few changes to mortgage rates this week, and this is the only one from a bank.
But the background situation is of falling wholesale rates, and swap rate reductions have actually picked up.
Since the beginning of May, one year wholesale swap rates have fallen -19 bps to 1.52%, two year swap rates are down -19 bps to 1.49%, and three year swap rates have fallen -20 bps to 1.50%. These are all historic lows. And as our charts show, the pace of the reductions picked up markedly after the March 27 signal that an OCR rate cut was likely. The actual May cut hasn't changed the pace. Wholesale markets are keying off what they think Adrian Orr thinks.
At the same time in the background, banks have been quietly reducing some key deposit rates, including where the important volumes are in under one year term deposits, and in some key savings accounts.
Both these reductions allow banks to reduce home loan rates while maintaining their net interest margin.
We suspect that even lower rates are coming from some other banks soon - as soon as Monday.
3.89% is no longer an uncommon rate. You can get it for fixed rate contract rems on one, two or three years from multiple institutions. There are five offering it for one year contracts, two offering it for a two year contract, and virtually three for a three year contract. That covers seven of the eleven banks in the New Zealand mortgage market.
But 3.89% from SBS Bank is market-leading for the 18 month fixed term and they are trhe only bank offering this rate for this tenor.
And don't forget that TSB is offering "a cash contribution of up to 0.50% of the total loan amount, up to a maximum of $4,000" until June 15. There are conditions of course, but many borrowers should be able to meet those.
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 May 24, 2019||%||%||%||%||%||%||%|
|China Construction Bank||5.15||5.10||3.65||3.90|
|with price match promise||4.85||3.89||4.09||3.89||3.89||4.35||4.45|
In addition to the above table, BNZ has a fixed seven year rate of 5.95%.