Late this afternoon, the Co-operative Bank announced new lower home loan rates for fixed four and five year terms.
These new rates will be effective on Wednesday, October 15, 2014.
These new rates are both the lowest in the market at present.
For four years fixed, the new Co-operative bank rate is now 6.50%, down -25 bps from their previous offer.
For the five year fixed term, their new rate is 6.75%, down -14 bps from 6.89%.
Both are 'standard rates' and do not come with any special conditions.
The Co-operative Bank four year rate has wrested the 'best rate' position off of Kiwibank.
Their new five year rate has wrested the 'best rate' position off of both Kiwibank and SBS Bank.
Carded retail home loan rates have not been moving much lately. Much of the bank competition has shifted to the non-rate incentives of 'healthy cash bonuses', TVs and PlayStations, and renovation prizes.
Only TSB Bank has a carded home loan offer of 7% or more - every other bank is now below that benchmark.
However, in the background, wholesale swap rates have been moving down in response to international conditions.
While most banks will be happy to pocket the extra margin offered by lower wholesale rates, it does open the door for lower retail interest rates and today the Co-operative Bank has availed itself of the option.
On their own, a minnow like the Co-operative Bank may not motivate one of the big four to follow. However, some of the other smaller banks like TSB Bank or SBS Bank may be tempted. Time will tell
See all banks' carded, or advertised, home loan rates here.
The current incentive offers are here.
This is how we expect the updated mortgage rates will compare as at 8:00 am Wednesday, October 15, 2014:
| below 80% LVR | 1 yr | 18 mths | 2 yrs | 3 yrs | 5 yrs |
 |
5.75% | 6.25% | 5.99% | 6.49% | 6.99% |
 |
6.09% | 6.30% | 5.99% | 6.19% | 6.99% |
 |
5.99% | 6.25% | 5.99% | 6.19% | 6.99% |
 |
5.79% | 5.89% | 6.19% | 6.79% | |
 |
6.09% | 6.30% | 5.99% | 6.19% | 6.99% |
| Co-op Bank | 5.95% | 5.89% | 5.99% | 6.19% | 6.75% |
 |
5.75% | 5.75% | 5.75% | 6.99% | |
| SBS Bank | 5.85% | 5.99% | 5.99% | 5.89% | 6.79% |
 |
5.95% | 6.05% | 5.79% | 6.30% | 7.00% |
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Mortgage choices involve making a significant financial decision so it often pays to get professional advice. A Roost mortgage broker can be contacted by following this link »
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