Today, Westpac have added a new less than 80% LVR mortgage special for an 18 month term.
The new rate is 5.69%, 16 bps lower than their standard rate of 5.85%.
Earlier last week Westpac added a 'special' one year fixed rate of 5.39% for borrowers with at least 20% equity.
This latest cut gives Westpac a clear advantage in the 18 month segment among its main rivals.
Wholesale money rates which rose sharply over the Christmas-New Year period have fallen since then, and fallen further and flattened since the recent emerging market travails.
See all carded, or advertised, bank home loan rates here.
| below 80% LVR | 1 yr | 18 mths | 2 yrs | 3 yrs | 5 yrs |
 |
5.49% | 5.85% | 6.29% | 6.65% | 7.20% |
 |
5.49% | 5.85% | 6.29% | 6.60% | 7.20% |
| BNZ | 5.39% | 5.85% | 6.29% | 6.39% | 7.20% |
| Kiwibank | 5.45% | 5.95% | 6.40% | 6.90% | |
 |
5.39% | 5.69% | 6.29% | 6.65% | 7.20% |
| Co-op Bank | 5.29% | 5.85% | 6.25% | ||
 |
5.39% | 6.29% | 6.55% | 7.20% | |
| SBS / HBS | 5.35% | 5.60% | 5.80% | 6.10% | 6.70% |
| TSB | 5.30% | 5.65% | 5.95% | 6.40% | 7.20% |
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15 Comments
Certainly true in the long-end (4-5yrs) which are down 25bps or so, but the short end (1-2 yrs where todays Westpac rate cut are) they has been rising this past few weeks (up 10bps since mid-Jan) as the yield curve flattens as it always does as it gets closer to a rate hike - they are cutting margins for market share reasons solely.
Only for that time period. Unless the customer can judge that well and take a term long enough that when it ends the floating is dropping. I'd suggest that would be luck as its un-judgeable IMHO.
If however you know how David Im sure many would be interested to hear it.
regards
Ivan considering that they hedge most of their mortgage book, how are they going to "sting them". Banks dont' carry billions of dollars of interest rate risk, unless youre confusing them with US and European banks, and look what came of their financial markets risk taking? But the reason for care is that 18 months is short enough to be almost floating in the context of a 30yr rate mortgage, but long enough to stop you from being able to re-forward fix it should things run away and youre stuck with a rate thats going to rapidly run out with no ability to do anything about it for many months i.e. better to fix if your time horizon is that short.
Its like shooting ducks in a tunnel .
People may be asking how fixed rates can still come down with the OCR being picked to go up?
Well its simply that the foreign funds borrowed in Japan and Hong King at close to zero % , can get a yield here of around 3% , and thats the money Westpac is offerring its clients .
And lets face it , the interest rate margins for the Banks are just too good to be true .
For foreingers they cant miss , its like shootiing ducks in a tunnel .
Or a feeding frenzy .
Some call it a win/win .
I have my doubts it can last.
Hmmm, the pieces of the puzzle are coming together......
http://www.interest.co.nz/property/68166/westpac-economists-say-january…
Are Westpac struggling to grow their loan book?
Bigblue - remember that there are at least three components to what makes up an mortgage rate, their wholesale cost of funds (i.e. the swap rate in the case of fixed terms) , the bank funding spread that they have to pay over that to the market/investors, plus the margin they apply on top of those. Their economists are only predicting what they think will happen to the OCR which will, and already has impacted swap rates, but what the rest of their bank is doing here is cutting their bank margin to increase market share in the mortgage market - two totally different parts of the bank dealing with different issues.
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