This morning, BNZ has announced a 5.99% two year home loan rate.
This is being offered under its Classic product, a 'special' rate with specified terms and conditions. (Their standard rate is 6.39%.)
BNZ is effectively the last bank to adopt that pricing point for a two year fixed rate mortgage.
The only bank with a different rate is HSBC who offers their Premier clients 5.85% for that term.
It is rare that virtually all banks all adopt the same pricing point for a mortgage term.
However, only SBS Bank and Co-operative Bank have that rate as a standard rate. All others have applied 'special' terms and conditions.
Today's reduction by BNZ tracks an interesting set of rate changes for their two year fixed home loan rate. It started the year at 5.95% but quickly went up to 6.29% in the second week of January 2014. It stayed at that 6.29% rate until mid March when it was reduced to 5.95% until the end of May. Then for a brief three week period it was reduced further to 5.89%. However it then jumped to 6.39% until early August. The fall to today's 5.99% has been driven by rivals' rate cutting.
Mortgage rates in the one to three year range are generally soft at present, and we have seen renewed rate competition in this zone since the last Reserve Bank Official Cash Rate hike late last month.
With a pause signaled by the central bank on more hikes until after the election and falling international bond yields, the New Zealand swap markets have been reflecting these shifts and the cost of funds allows banks to offer sharper rates.
No doubt, the Reserve Bank will be somewhat frustrated with the direction of the wholesale markets, but relatively happy that the price heat seems to be going out of the housing markets especially in Auckland and Christchurch.
Non-rate inducements are now growing in importance, especially cash incentives.
Banks bundle these incentives when they negotiate so borrowers will need to be careful and clear of their objectives in these discussions. Use a mortgage calculator that displays the full cost of your loan when you are making these assessments.
See all banks' carded, or advertised, home loan rates here.
This is how the updated mortgage rates compare as at 7:00 am Wednesday, August 6, 2014:
| below 80% LVR | 1 yr | 18 mths | 2 yrs | 3 yrs | 5 yrs |
 |
6.05% | 6.25% | 5.99% | 6.65% | 7.15% |
 |
6.09% | 6.30% | 5.99% | 6.65% | 6.99% |
 |
5.99% | 6.25% | 5.99% | 6.25% | 6.99% |
| Kiwibank | 5.99% | 5.99% | 6.65% | 6.95% | |
 |
6.09% | 6.30% | 5.99% | 6.65% | 6.99% |
| Co-op Bank | 6.00% | 6.00% | 6.00% | 6.25% | 6.89% |
 |
5.85% | 5.85% | 5.85% | 6.99% | |
 |
5.85% | 5.99% | 5.99% | 5.95% | 6.79% |
 |
6.00% | 6.05% | 5.99% | 6.60% | 7.00% |
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