ASB is ending a week of sharply sinking fixed mortgage rate offers with a particularly aggressive new rate card.
ASB now has a full range of 'specials' that meet or beat the offers from their main rivals in every term but one. They are clearly setting the pace for the major lenders.
Their new six month rate has been cut by -34 basis points to 3.35%.
Their new one year fixed rate has been cut by -20 bps to 2.85% which just a new days ago would have been market-leading but is now an 'average' and not-so-competitive level.
ASB's 18 month fixed rate is also down by -20 bps to 3.05%, which just matches their main rivals.
But their new two year rate of 2.69% is their new fighting rate, and well below all-comers. This is the lowest mortgage rate ever, for any term, since home loans have been available in New Zealand. It will become the negotiating benchmark that all other banks will have to face.
Their new three year rate of 3.35% matches ANZ's offer.
Their four year fixed rate of 3.45% is lower than any of their main rivals and is a remarkable 100 bps lower than the ANZ offer for this term.
The same is true for ASB's new five year fixed rate of 3.55%.
ASB fixed housing 'special' interest rates require a minimum of 20% equity in the security property provided to ASB. These home loan 'special' rates are not available on loans for business purposes, or HomePlus and may not be available on bridging loans.
The new ASB offer becomes effective on Saturday, May 23.
Unlike Westpac, ASB has also reduced its Standard rates by the same amounts, keeping is margin between the two at 50 bps for all terms to 3 years.
ANZ, BNZ and Westpac have all recently launched new lower rate cards, but each is now off the pace again and will probably need to revisit their pricing again. Certainly they will need to advise their front line staff of new negotiation benchmarks. Customers will be emboldened to ask for "more".
Interestingly, the main bank most off the pace now is state-owned Kiwibank - and it is from them the next move is most likely to come.
As we have noted elsewhere, these sharp home loan rate decreases are going to mean more pressure on savers. Banks are adept at not announcing TD rate cuts at the same time, doing those separately but often so the decreases each sound small. But they are compounding to very low offer rates now for term deposit investors.
One useful way to make sense of these new lower rates is to use our full-function mortgage calculators.
And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options.
Here is the updated snapshot of the advertised lowest fixed-term rates on offer from the key retail banks at this time.
| Fixed, below 80% LVR | 6 mths | 1 yr | 18 mth | 2 yrs | 3 yrs | 4 yrs | 5 yrs |
| as at May 22, 2020 | % | % | % | % | % | % | % |
| ANZ | 3.65 | 2.79 | 3.05 | 2.95 | 3.35 | 4.45 | 4.55 |
 |
3.55
 |
2.85
|
3.05
|
2.69
|
3.35
|
3.45
|
3.55
|
 |
4.79 | 3.05 | 3.05 | 2.99 | 3.39 | 3.49 | 3.59 |
 |
4.29 | 2.99 | 3.39 | 3.65 | 3.99 | 4.09 | |
 |
4.79 | 2.79 | 4.25 | 2.79 | 3.39 | 3.49 | 3.59 |
| Bank of China | 3.89 | 2.79 | 2.89 | 2.89 | 3.19 | 3.79 | 3.89 |
| China Construction Bank | 4.70 | 2.80 | 2.85 | 3.19 | 3.30 | 3.45 | |
| Co-operative Bank | 3.09 | 3.09 | 3.35 | 3.35 | 3.69 | 3.79 | 3.89 |
| Heartland Bank | 2.89 | 2.97 | 3.39 | ||||
| HSBC | 3.49 | 2.80 | 2.85 | 2.89 | 3.50 | 3.60 | 3.70 |
| ICBC | 4.29 | 3.18 | 3.18 | 3.18 | 3.20 | 3.99 | 3.99 |
 |
3.89 | 2.99 | 3.05 | 3.05 | 3.69 | 3.79 | 3.89 |
 |
3.39 | 2.79
|
2.99 | 2.99 | 3.39 | 3.79 | 3.89 |
In addition to the above table, BNZ has a unique fixed seven year rate of 5.20%.
Fixed mortgage rates
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96 Comments
"start repaying the mortgage with the difference"
That's the idea!
Get it in from you and don't lend it back out to another. Reduce net Household Debt. The banks will have to make their margins by lending out to the non-property speculative areas of business. (Construct a new house? Fine! Here's your facility. Want to buy another existing house over your immediate accommodation needs? Sorry, you'll have to look elsewhere)
This isn't about making more, cheaper mortgages - it's about risk reduction for the lenders.
(I'll suggest the next batch might ask for even more than 20% equity to access the 'attractive' rates!)
As in hold your assets. All those people who panicked and switched out of growth Kiwisaver funds probably regret it now since they sold near bottom and missed out on the rebound (let's not get into overpriced shares after the rebound shall we?).
Property might be like that. However, I bought a house to live in. I'm not worried about a "portfolio". Even if there is a house price crash it won't matter for the vast majority of people, just those who have bought in the last year. At least they have a home. Property prices only matter when you're buying or selling, and most people don't buy or sell in a 2 year window.
Even if there is a house price crash it won't matter for the vast majority of people, just those who have bought in the last year.
Wrong. House price crashes affect everyone from politicians to humble street cleaners (the unsung heroes of our time). Crashes even affect the beneficiaries of bubbles. But most people don't understand how house price bubbles actually drive and influence an economy. If house prices were to fall 40% yet not influence people's decisions to spend, then you would be right. The less spent into the economy means fewer employment and income opportunities for the majority. Unfortunately, it doesn't work like "house prcies fall; everything remains the same". If the NZ media spent more time talking to people like Robert Shiller, then people might think differently about the impact of bubbles. The housing variant is the worst for negatively impacting an economy.
Agree there JC. I've read most of Shillers books and watched quite a lot of his youtube content, including the free online Yale finance/economics lectures.
We massively down play the social and economic consequences of a housing bubble....the ignorance I witnessed the last 10 years here in NZ after coming back from the USA where I lived through their property bubble has been painful to watch to say the least.
Bought my first home 7 years ago.If house prices fell 50% I'd still have 30% equity. That's all I was saying. Have $100 discretionary spending a fortnight after depreciating my appliances etc. A drop in house prices won't change my spending as there's so very little to go around. I'm sure there's heaps of people around in a very similar situation. But yes, if I lost my job, that would be an issue.
Whatwillhappen, you would be in the minority then. There is quite a large body of research on human spending behaviour. Equity in a house provokes more frivolous and discretionary spending than income/PAYE. Behavioural research also relates this to studies on gambling, where the same behaviour is seen on risk taking with winnings. What they refer to as "spending the house money" (house being the casino).
In a very real sense, people feel wealthier with a larger amount of equity in their home because it is money they can access if needs be, they can extract equity or downsize if needed.... but it goes much deeper than that. Human psychology is highly predictable when you have enough data points and when it comes to bubbles bursting, loss of equity etc, we have much data. The vast majority of home owners will change their spending behaviour in response to loss of house value. It always, always happens and this time will be no different. We need to be talking about degrees of loss and length of recession, not ifs and buts.
And obviously, that's just the property bubble popping wealth effect....but there are many jobs and much income associated with the property bubble. Additionally, NZ household debt is extremely high and income is also about to deteriorate in many sectors. Debt is also deflationary in such circumstances and amplifies the change in spending behaviour from exuberant to frugal.
Additionally, NZ household debt is extremely high and income is also about to deteriorate in many sectors.
Debt is actually concentrated. The distribution of debt across all h'holds lis likely to look less bad. Remember, low-income h'holds are constrained by how much debt they can take on. High-income h'holds have a surprisingly high level of debt because they have better access to it. I think the ability to access money to pay for emergencies is a useful yardstick for measurement as it shows liquidity.
Interested to hear any stories from those breaking fixed deals in the high 3's and 4's to refinance with an existing bank and getting relief from the break fees in exchange for not taking the business to a competitor bank. My opinion is if you want or need to improve your cash flow position and you are forced to pay all the break fee. You might as well on principle take the business to another bank if they will lend to you. At least you might get a cash contribution to offset the break fee. Probably won't come to a head until after mortgage deferrals and temporary interest-only arrangements expire in September, October. But if your income has taken a hit in that time. You might find yourself a mortgage prisoner of your existing bank.
My strongest advice is do NOT to be sucked in by these low rates.
Do not borrow anything even if the rates are 0% because you will still have the huge debt to pay off one way or the other.
The ANZ, as well as other respected commentators, have said that house prices will fall dramatically.
If that's the case then ultra low interest rates will not help you.
Wait a few months, maybe a year and see where the market settles and then maybe it will be safer.
In the meantime stay away from debt and mortgages or you will very likely lose everything.
For FHB read before you get carried away by FOMO.
https://www.bloomberg.com/news/articles/2020-05-21/australian-housing-i…
Yvil, you are correct!
With interest rates as low as they are, why on earth would you be wanting to remain renting?
$12,500 interest or $250 per week for $500k borrowed is unbelievable if rates hit 2.5%
Why people can believe that house prices are going to go south when owning is just so affordable.
People with portfolios are going to do very nicely as their fixed rates come off
As I have written before, that's EXACTLY what happened in the UK 'last time', when it was FAR cheaper to own than rent, and guess what? It didn't stop Their Crash. No Government or economy wants to see that and does its best to avoid it, but they still don't.
Our 'correction' will be different again. In a few years time, we'll know how different. But a correction is coming. In fact, it's probably already here if you look hard enough!
Low interest rates is an indicator by itself how bad the situation is.
Also from very low rates to slightly more is not the same as was from 7% to 6% to 4% - Law Of Dimishing Return.
Interest rate falls from 3% to 2.5% is approx $6 per $100000 so for $500000 mortage will be appox$30 less - Good for people whose mortage is for renewal BUT will that be the only reason for FHB to buy despite jobs and business at risk. Have doubts.
1) Many people don't *want* to remain renting. They simply can't save enough for a deposit. It's been said a million times, but some people still don't understand: the limiting factor is the deposit, not the service costs. How on earth is someone on a 50k wage supposed to save 200k in Auckland? "Just so affordable" my ass...
2) Why do people believe that house prices are going to go north when buying is already severely unaffordable for the masses? People with portfolios of massive debt are going to go bankrupt as the revenue stream dries up and capital gains turn into capital losses.
Your 200k figure is based on a $1M house value. Why on earth is a single earner on $50k entering at that level? Instead consider entry level $650k homes (which do exist, and are likely to be at a discount soon). Then factor in a partner also earning around $50k (quite reasonable, in fact fairly low in Auckland). Now add in the kiwisaver home grant bonus, plus banks willing to lend a 10 percent deposit for FHBs, and that deposit is closer to 50k in the amount you have to save. Divide by two (for a couple) and that is 25k. I think having saved 5k per year for 5 years is quite reasonable, and most of that could be through kiwisaver.
LOL that's a lot of mental gymnastics you had to go through to make a bottom of the barrel, probably bottom 5% house in Auckland 'affordable' for the average couple. Just managed to show that my point was valid.
Mind you, at 10% deposit you won't get these interest rates. Plus you say goodbye to both kiwisaver accounts... Plus you make that couple extremely vulnerable to a house price downturn.
#sniffcheck
1) $600k max cap on used properties in Auckland for Home Grant (and $130k income max for 2 peeps)
2) In your scenario, $100k household income - cant see a bank lending $600k (6x income) @ 92%. Even 90% would be a stretch
3) In said $50k per person scenario, Kiwisaver contributions likely to be $1500 + employer and govt kick in might take to $3k. Not $5k . I guess plausible to then save 5-10% of remaining after tax income though. But what wage were they on 5 years ago?
4) Auckland house for $650 eh. Wonder how much choice? Maybe outer suburbs? Long commute.
5) Lets assume $585k loan, 90% - at best rates of maybe 4% (best carded + low equity margin) = circa $3k per month. $36k a year - that is about 50% of the take home pay of this couple. Add on rates, insurance, maintenance. That's not affordable (which is why they would be declined).
6) Just rates, interest and insurance likely to set them back $550 p/w. Same as rent. But, exposed to nightmares of one of them losing job or *shock* having a baby.
7) See above 6 to understand why houses are overpriced in NZ, esp Auckland
Court Jester
"How on earth is someone on a 50k wage supposed to save 200k in Auckland?"
Your choice to live in Auckland and you are paying a cost for that; high rents, high house prices, high ($ and time) transport costs . . . .
On $50k you need to seriously question as to whether the benefits (of which no doubt there are plenty) are worth living in Auckland if the intrinsic value and long term financial security of home ownership is your goal.
Your choice, just don't moan about the cost of your choice. :)
Sluggish and CJ
That is reality - you make choices so you live with the benefits and costs.
Plenty of young people have moved out of Auckland to get on the property ladder - enjoy the provinces and may or may not return to Auckland later.
I was one who moved from Auckland about 40 years ago for that exact reason: I looked at the cost of housing and decided it wasn’t worth the cost of housing staying in Auckland. So stop bleating “it is only now, it is only now . . “ and “poor me, poor me . . .”
“Why can’t they be near family?” - well that is a cost. Many of those who have moved have family in Auckland and see them regularly - it is not suggested you move to the uttermost ends of the earth.
Why move?
My choice 40 years ago:
Keen to get a lifestyle block:
- Looked at 2acre bare block at Drury, no water or sewerage, no fences and natural gas pipeline through the property. $60,000. One hour commute to work and same to CBD in busy times.
- Bought a 10 acre block, 4 bedroom house, town water and sewerage, fully fenced, garaging and farm buildings including yards. $125,000. Five minute commute to work and shops; 1hr 30 to Wellington - could afford to go to Wgth and hotels for weekends as often we wanted with young family. Great lifestyle for the kids.
Dam glad I moved, would really really hate ever having to go back to Auckland.
So enjoy those long slow crawls in traffic jams and high rents/expensive house prices.
In the provinces we love seeing those crowded and static traffic motorway on TV each morning - madness!
" So stop bleating “it is only now, it is only now . . “ and “poor me, poor me . . .”" - who are you quoting here? I never said anything like this. I brought up an example. I already have enough money saved up for a deposit and it's growing at a very good pace. But I'm not on 50k per year. I brought up 50k because that's the median NZ income.
RE your second comment: I don't care about traffic jams, as I live a 5 minute drive from my workplace. If I'm lucky I might be able to keep working from home.
CJ
Well good on you.
The sad reality is that anyone on a basic wage such as $50k is not going to afford a house in Auckland. I have posted many times that in the 1970s a blue collar recent Pacific Island immigrant without qualifications or bringing in capital could buy a house - as many did in Mangere.
Yes, there are affordability issues that need to be addressed.
But, at an individual level, life is like a game and one needs to play to the conditions. Those who are successful- such as the Richie McCaws - don’t bleat but get on and play to the conditions. For young Aucklanders that may mean having to move at least for a time to get onto the property ladder.
Complaining is part of solving the problem though. Imagine if nobody complained about house prices, just sucked it up and kept to themselves. In that case, neither parties would see the unaffordability crisis as a problem that needs to be solved.
Complaining about these things at least raises awareness, and when many people raise their voices against the status quo, eventually politicians will have to address the issues.
The "Suck it up an be a man" mentality is so last century... It perpetuates selfishness. Empathy, social awareness and tolerance are way more acceptable nowadays.
You can say whatever you want, but I am not buying it. It's very risky now to get a huge debt and get into property market. There are so many factors we still dont know yet: how many jobs will be lost, how immigration will be impact during post-lock down, how many airbnb rentals will be on sale, how many houses are being built and finally, if the housing price is falling, will people be confident to buy? Remember, most people only invest when they see there is increase, they wont invest or do anything when the market is falling. If you have a bit investiment in shares, you will know what I am talking about.
The reason we have got to where we are with the housing market (price wise) is that people have been buying with the expectation of capital gains and the banks have been willing to lend to them because the repayments have been projected to be at a serviceable level. But of course that never assumes significant unemployment and wage reductions which we've seen.
Anyone work in the banking world here and know what level of unemployment and wage reduction that bank lending stress tests are?
TM2 - in your thinking do you consider future interest rates, say in 5 or 10 years time? Or do you just thinking about what is happening here and now when you make these suggestions?
Say rates are back up at 8-10% in 5 years time, but you you've got a mortgage that is 5-8x income, would you still be happy with that choice to buy?
Or do you assume that because rates are 2.5% now, they will continue to be so across the whole 30 year term of the mortgage (or probably most importantly over the first 5-10 years when you could get into negative equity).
IO, it doesn’t matter what the rates are in 5 or 10 years time.
Rates are never going to go higher than 5% again, as the market won’t allow this.
When your income is six figures and net asset figure is large, why would I say anything else?
Property investing is providing a service to people that need accommodation and something that the government is no good at doing!
"Rates are never going to go higher than 5% again, as the market won’t allow this" -- what market? Never above 5%. I assure you a depo market may well determine that's the return they want for risk. What an absurd thing to say that they will never go above a rate they were above literally 3 years ago. Muppet.
That thinking is precisely why a bunch of people will get burnt.
Why do you think bank servicing requirements are NOT based on 2.x%, 3.x% or even 4.x%??
The Banks can all see that it is going to get harder to grow their books as the bright people in New Zealand are going to refinance at best or borrow to carry out renovations and additions. If anyone is thinking about buying at present they would have to have rocks in their heads. In saying that you might contemplate selling and buying at the same time as generally in a bad market the higher priced houses come down in value more than the cheaper homes. If you do it well you have the opportunity to get more bang for your buck. Why would anyone go out now and buy a home especially a first home buyer. The Banks, the Reserve Bank and analysts are all saying the same thing. Houses are going to drop in value. With all the business failures and job losses something has to give. The lowering of interest rates will not help some people. The Banks are not lowering interest rates because they are feeling generous. They are doing it because they are starting to panic. Less people are going to buy homes than before Covid 19. When the pool of prospective borrowers drops in numbers the only way to attract new customers is having the cheapest product in the market. As a country we are in a very serious economic predicament. It is now the time to be patient and wait for values to drop. When you do eventually buy you will need to borrow less than now and the interest rates will be cheaper than 2.69%. No brainer.
Also you must have a Job to pay anything at all. The wage subsidy wont last forever.
I sold just before lock down and wont be buying any time soon. Company i work for have layed off 1/3 of staff and we are on 4 day weeks. Next round of lay offs coming quick as machine orders from the USA has fallen off a cliff.
I am cashed up and waiting for the dumpster fire in the housing market. I could buy right now and have 50% equity but i wont as im unsure i will have a job in 6 to 8 months. I have no kids and parents are happy to have me for a while until things arnt so crazy. Actually really nice to spend more time with the olds.
But its just one example of what a lot of people will be doing. Flatmates will be moving out in with their parents for a while.
Albeit in the UK, this is interesting - https://www.theguardian.com/cities/video/2020/jan/07/can-millennials-ge…
The point being cheaper and cheaper rates aren't getting millennials on board, because it's pointless if you don't have work/a deposit/stability/the income.
A find it very interesting that most people (who don't read interest.co.nz) are completely unaware of this happening on a massive scale right now. The sentiment seems to be that everything will be back to pre-covid19 "normal" in a few weeks. Never mind the job losses, the giant hole in the GDP, airBnB properties hitting the rental market by the thousands...
I too read many of these groups on FB and I don't know whether to laugh or cry. There was a well known Auckland agent with 35 years experience spouting that "100% of barfoots auction this morning (Wednesday of this week) sold at or above RV". Upon reviewing the interest.co.nz auction results page I see there were 3 properties sold that day and 5 passed in. All marketed by B&T.
I've read most of Robert Shillers books and online content (has studied bubbles and has nobel prize) and lived through the GFC in the US, then you read those FB pages and talk to property investors as well as the type kiwi property buyer - we have had all the signs for years now of a massive property bubble. If it weren't for central bank and government policy, it probably would have burst by now - but it appears to be the more that we've done to avoid making it burst, the worse the situation has become and the likely outcome now of it bursting as I'm not sure what could be done to stop it from bursting - other than government now buying all houses for new entrants at the current market rate.
The issue with fixing a home loan rate at the moment is it's like trying to catch a falling knife. Fix this week and by next week the offer you took was way out of market.
The clear winners will be banks that can get out of residential lending and diversify into other products. As rates head downwards so will margins.
Low interest rate good for existing owners as will save $$$ when their mortage comes for renewal as with job and business loss and with economy ranking, it is highly unlikely that low interest rate will give boost to house price as writing is on the wall that come what may house prices will fall anyway from 10% plus ....will it be 20% or 30% or more has to wait and watch.
https://www.bloomberg.com/news/articles/2020-05-21/australian-housing-i…
Interest rate were already low and now low interest rate is the new norm - law of diminishing return at play so low interest rate are good but not the booster.
The thing is, you never have to buy a house and that's fine if that suits you. It just means you're paying someone else's mortgage for them. With rates down here, many rentals will be spinning off free cash-flow, even at reduced rents. NZ just hit 5m people, rentals will start clearing.
Capital appreciation is a bonus, but it is the positive carry that is the primary focus with an investment property.
Of course that's a risk, but nothing is ever gained in life without accepting some risk. Often the worse never eventuates either. The thing with markets is that when everyone has the same view, it often goes the other way.
Do you think successful people sit around second-guessing themselves all day?
House in Mellons Bay which would have gone near around CV of $1050000 if not more has been sold for $915000 ( Approx 12% to 20% below what would have fetched before Lockdown):
https://www.oneroof.co.nz/estimate/38-judkins-crescent-auckland-165134
Sign of things to come. Wait and Watch
Yeah that's why $105000 otherwise would have been 1.1 million plus. Also when listed expectation was million plus but soon changed.
Pre Lockdown in worst scenario this house would have gone million plus. Can argue but the fact remains that it went for a discount but who knows going future this may seem to be an excellent price for the vendor as this is just the begining.
Hi Zachary, This is what will lead the market down just as one house earlier sold at premium use to lift the house price in that street/area up.
This fall is also meaningfull and is same that was witnessed between November 2018 to August 2019 (During that time also it would have sold in early 900s) but from September 2019 market jumped and was up by 10% to 20% minimum till lockdown - This is about Auckland, may be regions had different story.
After Lockdown - How much will it fall is hard to say but will be bad.
The reason that successful property investors are such, is because there are so many that don’t invest due to fear.
When you can make 50% profit on your costs and many are saying that they won’t buy, you can see why so many doom and gloomers still don’t and never will own!!!
If you don’t take advantage of the opportunities coming up, don’t bother blaming anyone else for your predicament
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