ASB has reduced their 18 month fixed home loan 'special' rate by -40 bps to 2.65%.
At that level, they now match HSBC and the Bank of China for that fixed term and undercut the carded rates of all their main rivals.
ASB has also cut most other fixed rates, except their already-low 2.69% two year fixed rate 'special'.
Their new one year fixed rate 'special' is now also 2.69%, a -16 bps reduction.
Their new three year 'special is now 2.99%, matching BNZ but not as low as Westpac's 2.79% rate for that term.
Their new four year 'special' is now 3.09%. Their new five year rate is 3.19%. Neither of these reductions threaten the lower rates at both BNZ and Westpac who have them each at 2.99%.
Similar reductions have been applied to their equivalent standard rates.
At the same time, ASB has cut its term deposit offers hard, with reductions of -10 bps to up to -30 bps. In fact, their term deposit rate card is now the lowest of any main bank and their highest offer is now just 1.70% for five years. The popular 6 month TD term is now only 1.65% and the one year term is now only 1.60%. No other main bank is lower. And it is probably a sign of things to come from the other main banks. There seems to be no competitive penalty for very low term deposit offer levels. Banks generally have more funds flowing in that they have demand to lend them out.
Since mid May, wholesale swap rates have risen about +10 bps but this has not stopped banks cutting both fixed home loan rates or term deposit rates.
Kiwibank's floating rate cut hasn't been matched by the main banks yet. It may not be until those big banks feel some pain from customers who shift away, attracted by the lower Kiwibank rate. To a large extent that will depend on the collective actions of SMEs. It is a move that is long overdue.
One useful way to make sense of these new lower home loan 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 lowest advertised fixed-term mortgage 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 June 19, 2020 | % | % | % | % | % | % | % |
ANZ | 3.65 | 2.65 | 3.05 | 2.75 | 3.35 | 4.15 | 4.25 |
3.55 | 2.69
|
2.65
|
2.69 | 2.99
|
3.09
|
3.19
|
|
4.29 | 2.79 | 2.79 | 2.69 | 2.99 | 2.99 | 2.99 | |
4.29 | 2.65 | 2.79 | 3.25 | 3.45 | 3.55 | ||
4.79 | 2.79 | 4.25 | 2.69 | 2.79 | 2.99 | 2.99 | |
Bank of China | 3.45 | 2.55 | 2.65 | 2.65 | 2.75 | 2.85 | 2.95 |
China Construction Bank | 4.70 | 2.80 | 2.65 | 2.65 | 2.80 | 2.89 | 2.99 |
Co-operative Bank | 2.79 | 2.79 | 2.79 | 2.79 | 3.39 | 3.49 | 3.59 |
Heartland Bank | 2.89 | 2.97 | 3.39 | ||||
HSBC | 2.95 | 2.60 | 2.65 | 2.65 | 2.80 | 2.89 | 2.99 |
ICBC | 2.95 | 2.58 | 2.79 | 2.68 | 2.79 | 2.99 | 3.445 |
3.89 | 2.79 | 2.89 | 2.89 | 3.39 | 3.79 | 3.89 | |
[incl Price Match Promise] | 3.39 | 2.65 | 2.65
|
2.69 | 2.79 | 2.99 | 2.99 |
In addition to the above table, BNZ has a unique fixed seven year rate of 5.20%, which is unchanged in this update.
Fixed mortgage rates
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51 Comments
with ASB we are in to chewing gum territory for the return on a 10k term deposit,so if you have to save then you will need to spend less as the bank cant help you.and those who are using their credit card for everyday transactions in the hope of earning airpoints should remember that the same bank is earning 1.5% in commission from the retailer on every dollar you spend.
It does start to make you wonder how much lower they can possibly go before it's not worth the banks writing mortgages at that level, just from the perspective of administration costs. Some countries appear to have significantly lower rates, but when the numbers are so low you have to be very careful about how the fees come into it, and what the effective rate is.
I imagine there's a bit more room, but definitely we're well into diminishing returns territory if you're thinking about the overall cost change on a P+I mortgage.
Along with the rest of the global economy slides. Even in Oz, the Reserve Bank economists considered urging the Federal Government to shut down the real estate industry, "pausing" sales of established homes to avoid perceptions of a coronavirus-inspired housing market crash.
ABC News article: Reserve Bank considered asking for real estate transaction 'pause' amid property crash fears. https://www.abc.net.au/news/2020-06-18/reserve-bank-considered-asking-f…
Indeed - hence lending is restricted to the most wealthy minority with bullet proof incomes and unencumbered collateral in addition to that collateralising the loan contract.
Mortgage advisers say banks are making it tough to get loans approved – and it’s leaving frustrated buyers on the sidelines. Link
The capital deficient seeking leverage to speculate in asset markets cannot expect anything else.
Furthermore, banks are loading up on floating rate government assets via RBNZ LSAP operations, commonly known as QE. The thick end of $17.0bn is a long way from the $60.0bn target. Some claim it will rise to $90.0bn in the not too distant future.
Short term fix is fine if you still have your financials in order when it comes to the end of the short fixed term.
Many, on Fixed right now, are going to have to have an uncomfortable conversation with their lenders at maturity time.
I'll suggest again ( partly for this very reason) that 5 years Fixed @ 2.99% covers a multitude of sins - roll-over being the least of them.
(And, yes. Theoretically, Floating should be reviewed by lenders every day ( when each 'fixed' term expires), but it isn't in a way that, say, a 1 Year Fixed is at maturity. Getting borrowers into the bank store once a year is easier than every day!)
Myth you say?
The Reserve Bank of Australia (RBA) considered asking private firms to stop telling Australians about slumping property prices, when the early period of coronavirus panic stoked fears of a housing market crash. The key private sector provider of information about real estate in Australia is global giant CoreLogic (formerly RP Data). Its daily index stopped being published on May 20.
Australia's Central bank may not think so!
Yeah if median is 900000 plus need 180000 deposit to get those lowest interest rate and should be confident that ones job or business will not be affected by current situation
One should remember that as of now one can see lot of liquidity that has bern pumped by government and should be definite that the same liquidity will continue when all this freebies are over.
In theory it should be controlled against money supply, not prices. You’ll notice that our private debt levels correlate to the price of our housing market but most of that cost is land - and the amount of debt we create is based upon the amount banks can give based on interest settings - that are the result of CPI that doesn’t measure land. Some crazy chicken/egg thinking going on here that has resulted in a severely distorted property market.
In my view then the cost of lending for land shouldn’t have any correlation at all with CPI and the OCR. I.e if we drop OCR because there’s no inflation in consumer items, why then would that change the cost of lending for something that isn’t consumption? Bit it does/banks do. And it’s the main factor why we have a housing bubble.
Land appears to function like bonds. Price is inversely rated to interest rate movements. Central banks are destroying property markets like they have bond markets. No price discovery or if there is it is completely overshadowed by the interest settings influenced by OCR drops.
OCR cuts do have impact on CPI, see https://www.interest.co.nz/bonds/101245/rbnz-modelling-finds-economys-r…
CPI at 2% is a sign of a growing economy. High house prices can be dealt with supply and demand pressures e.g. cut migration or increase supply. As for destroying the property market, that depends on what a person's circumstances are.
I’m not arguing that OCR influences CPI (or not). And are you talking about inflation or GDP growth? They are different.
Have you noticed that house prices haven’t been rising at the rate of inflation? Nor GDP growth. And given its wages that pays for mortgage debt, which should rise inline with our ability to be productive (measured in GDP) how long do you think this is sustainable?
The biggest factor attributable to house price growth is the value of land and land isn’t measured in the CPI, but more debt can be lent against land each time the OCR is/was dropped to maintain the inflation target. It’s a very dangerous game to play in my view. You’ll know what I’m talking about if we hit stagflation and interest rates go back up. Might be the same for the bond market.
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