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Kiwibank raises its 2-year fixed mortgage rate to 5.45% from 5.25% in further sign cheap mortgages are on the way out

Property
Kiwibank raises its 2-year fixed mortgage rate to 5.45% from 5.25% in further sign cheap mortgages are on the way out
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Kiwibank, which has been at the forefront of offering cheaper mortgage rates, is lifting its two-year fixed rate to 5.45% from 5.25% in a further sign that super-low rates are on the way out.

State-owned Kiwibank's new rate will be introduced tomorrow and it comes less than two weeks after the bank ceased a special offer rate of 4.99% on 2-year fixed mortgages.

The rise comes on a day in which the wholesale markets have seen fairly substantial rises in interest rates after the US Federal Reserve indicated they were thinking of tapering off their quantitative easing (QE) programme in response to a recovering US economy.

In response the New Zealand dollar dropped sharply, while wholesale interest rates climbed.

The 1-year swap rates gained 4 basis points to 2.82%, 2-year rates lifted 10 points to 3.17% and the 5-year rates were up 18 points at 3.85%. Shorter-term rates were unchanged.

The move by Kiwibank puts it in line with some of the larger banks with its 2-year rates after at various stages it has been offering the lowest rate. See our mortgage rate table here.

Home owners have been rushing to fix their mortgage rates in the expectation that the Reserve Bank will start increasing official interest rates, at the very least, early next year.

With the rapid move of many people from floating to fixed, the ratio of fixed rates will have climbed over 50% last month.

Such a move by homeowners will make it more difficult for the RBNZ to get traction when it does start raising rates in a move to dampen the over-heating housing market and reduce inflationary pressures.

See all advertised mortgage rates here.

  1 yr 2 yrs 3 yrs 4 yrs 5 yrs
           
4.95% 5.45% 5.80% 6.10% 6.30%
ASB 4.95% 5.45% 5.75% 5.95% 6.25%
BNZ 5.25% 5.40% 5.80% 6.10% 6.30%
Kiwibank 4.89% 5.45% 5.65% 6.10% 6.25%
Westpac 4.94% 5.45% 5.90% 6.15% 6.25%
           
Co-op Bank 4.94% 5.35% 5.75% 5.99%  
HSBC Premier 4.99% 4.99% 4.99% 5.50% 5.75%
SBS / HBS 4.95% 4.99% 5.65%   5.65%
TSB 4.88%* 5.30% 5.75% 6.10% 6.30%

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Fixed mortgage rates

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2 Comments

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Every time these banks put the rates up a few thousand more customers rush to fix long term, then a few weeks later the banks come out with another new rate that is even lower than where rates were previously. Will that eventuate again this time around?

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