Kiwibank launches 4.99% fixed 6-month mortgage 'special offer', borrowers must have at least 30% equity

Kiwibank launches 4.99% fixed 6-month mortgage 'special offer', borrowers must have at least 30% equity

State owned Kiwibank has launched a fresh mortgage special, offering 4.99% to borrowers for a fixed-term of six months.

The offer is 26 basis points below Kiwibank's standard six-month interest rate and 66 basis points below its floating mortgage rate. Borrowers must, however, have at least 30% equity in their property.

The new Kiwibank special follows the bank doing more than NZ$200 million of lending through a 4.99% one-year fixed special in April and May, and an earlier 4.99% six-month special offer last year.

The one-year special, and dropping wholesale borrowing rates, sparked fixed-term mortgage rate cuts from all the banks in April and May, leading to a swing by borrowers back towards fixing from floating.

See all bank advertised mortgage rates here.

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Good on them, but c'mon - 30% equity?  Where's the helping hand or consideration for first time buyers? 
Kiwibank really need to look at the "low equity" penalty that they apply for mortgages with less than 20% equity.  This penalty can add $20K to the cost of a house, and who does that hurt?  Those that are struggling to get a house in the first place. 
Seems harsh to me....

Yeah, lets encourage young people to a take on massive debt with hardly any equity at an interest rate that is highly unlikely to remain this low for more than a year or two, in a property market that is still historically overvalued.


My point is that the property market is skewed in favour of investors looking for capital gains - not first-time buyers and familes who need a home.  In fact, those purchasers are financially penalised when they purchase themselves a property. 
I didn't talk about encouraging young people to take on debt they could not afford, you did.  Every purchaser regardless of age or financial situation should measure the risks, opportunities and affordability, before deciding THEMSELVES whether to do it or not.
I was highlighting the fact that when first-time buyers and young families take that step, they find themselves penalised by the banks, because MOST first-time buyers cannot save more than a 10% deposit these days without outside assistance. 
To me, that is harsh.

Thanks for summing up in a nutshell what is wrong with the NZ pysche. 
Property is not just an investment opportunity.  A home is a fundamental human need and there is no need to load additional financial penalties on to people who have less than a 20% deposit.

Ever heard of pricing for Risk?
If I had deposits at KiwiBank at least I would be glad they are only discounting those loans which have a lower risk profile and wher eloses may be less likely.
Doesn't sound harse to me..............

Ever heard of fractional reserve banking and deposit guarantees? 
Your deposits at Kiwibank are pretty darn safe, as are mine.    
Australian and NZ banks are fairly robust and conservative when it comes to ensuring affordability of a housing loan.  If you cannot afford a loan, or a housing valuation (which all banks insist upon) doesn't stack up, you don't get the mortgage. 
Market risks and interest rate fluctuations affect everybody.  My point is that that banks should take a more holistic view when it comes to market risk - penalising first-time home buyers with additional financial penalties as well as the higher rates they pay actually increases the risk of a default, ironically....

Banks are now insisting less registered valautions than in the past: some doing up to 90% against QV and purchase price.
Yes NZ and Australian as some of the safest and most profitable in the world.
However  a 101 of Banking is you price for Risk so Banks can allocated the required caplital aside for the likelihood of Risk agiansit differing wieghted assets.
In the past Banks of higher LVR loans to take out Mortgage Indeminity Insurance to cover the top end exposure: now they self insure and waive low equity fees to get deals.
Only Bank I think that charges a premium for over 80% lending is Westpac.
I don't think in todays market first home buyers are getting hammered as much as you may think.
(I have seen 90% deals for first home buyers with discounted interest rates, cash contribution, no applications fees and no low equity fees).

Most companies charge one, whether its by way of an insurance premium or an interest rate penalty - there's also the welcome home loan scheme they're part of which can provide up to 100% lending for those that can afford a loan but no deposit....
interesting to see the short vs long term fixed alternatives out there at the minute....

6 Months?
Then what?
It goes lower?
Phh............Seriously KB, You might get a few suckers..........

Rates can only go lower from here - fix now and you will regret later when it drops 1% or 2%