BNZ has disestablished its two tier home loan interest rate structure, removing all its carded, or advertised, home loan rates for borrowers without a deposit of at least 20%.
However, such borrowers are still able to take out a loan from BNZ, but will be charged the bank's low equity margin on top of the interest rate faced by borrowers with deposits of at least 20%.
In changes effective today BNZ says all mortgage rates for fixed terms from six months to seven years for its Standard & Fly Buys loans and its Global Plus loans have been removed for high loan-to-value ratio (LVR) lending. They were broadly 50 basis points higher than its rates for borrowers with deposits of at least 20%.
The bank's standard rates are available to borrowers without a deposit of at least 20%, but they'll additionally have to pay a low equity margin of between 0.35% to 1.15% depending on the size of their deposit. See more details here.
The latest figures on banks' high LVR mortgage lending show they have capacity to increase it. The ratio of such lending made up just 3.8% of new mortgage commitments in January, well below the Reserve Bank's 10% limit, which banks will be tested on for the first time at the end of March. In the December quarter BNZ's net high LVR mortgage lending fell $294 million, leaving 14.2% of its total home loan book, by value, at LVRs above 80%.
The Reserve Bank introduced restrictions on banks' high LVR residential mortgages from October 1 last year. This means banks must restrict lending at LVRs above 80% (where borrowers don't have a deposit of at least 20%) to no more than 10% of total new mortgage lending. This 10% limit excludes high LVR loans made under Housing New Zealand’s Welcome Home Loans scheme, the refinancing of existing high-LVR loans, bridging finance or the transfer of existing high-LVR loans between properties, and new residential construction loans.
Two tier home loan offers became common from New Zealand banks last year with the Reserve Bank's high LVR restrictions being introduced. Most other banks still have them. See all carded, or advertised, bank home loan rates here.
| below 80% LVR | 1 yr | 18 mths | 2 yrs | 3 yrs | 5 yrs |
 |
5.69% | 5.85% | 6.29% | 6.65% | 7.20% |
 |
5.49% | 5.85% | 5.95% | 6.60% | 7.20% |
| BNZ | 5.49% | 5.85% | 5.95% | 6.35% | 7.20% |
| Kiwibank | 5.49% | 5.99% | 6.40% | 6.90% | |
 |
5.49% | 5.85% | 5.95% | 6.35% | 7.20% |
| Co-op Bank | 5.39% | 5.85% | 5.85% | 6.25% | 7.10% |
 |
5.39% | 6.29% | 6.55% | 7.20% | |
| SBS / HBS | 5.35% | 5.60% | 5.80% | 6.10% | 6.70% |
| TSB | 5.40% | 5.85% | 5.99% | 6.40% | 7.20% |
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.