A new low home loan rate has been announced in the New Zealand mortgage market.
SBS Bank has this morning launched a two year fixed rate at 5.19%.
It is also available from HBS Bank.
This beats the previous market low from BNZ of 5.39% which only briefly starred as the market low.
You have to go back to May 2013 to find a lower two year rate. Back then a number of banks had rates sub 5%.
SBS Bank's new rate is for residential lending only and requires a minimum 20% equity.
The bank offers a non-rate incentive of up to $2,000 for all other mortgage lending but this is not available with the new 5.19% rate.
The 5.19% rate is for 'new lending' only; existing clients can roll over their loans at the other 'reduced rates' rates provided they have their salary paid directly into a transaction account with the bank, but they don't qualify for any cash incentive.
A minimum $100,000 loan is required.
Lending under the Welcome Home Loan program or for an Advance Reverse Equity mortgage does not qualify for either the low rates or the non-rate cash incentive.
In addition SBS Bank's standard two year standard rate has been reduced to 5.39%, their three year rate to 5.69% and their five year has been reduced to 5.99%.
Their one and three year 'special' rates remain unchanged at 5.59% and 5.49% respectively, but their five year 'special' has been reduced to 5.79% from 5.94%.
All these changes come into effect today.
See all banks' carded, or advertised, home loan rates here.
The current non-rate incentive offers are here.
This is how mortgage rates from the banks compare as at 9:00 am Monday, February 9, 2015:
| below 80% LVR | 1 yr | 18 mths | 2 yrs | 3 yrs | 4 yrs | 5 yrs |
 |
5.45% | 5.70% | 5.55% | 5.99% | 6.49% | 6.59% |
 |
5.59% | 5.70% | 5.45% | 5.59% | 5.99% | 5.99% |
 |
5.69% | 6.09% | 5.39% | 5.69% | 6.49% | 5.79% |
 |
5.69% | 5.55% | 5.89% | 6.39% | 5.89% | |
 |
6.09% | 6.30% | 5.79% | 5.89% | 6.79% | 5.99% |
| Co-op Bank | 5.59% | 5.49% | 5.59% | 5.74% | 5.99% | 6.25% |
 |
5.45% | 5.65% | 5.79% | 6.49% | 6.49% | |
| SBS Bank | 5.59% | 5.74% | 5.19% | 5.49% | 5.79% | |
 |
5.70% | 5.80% | 5.50% | 5.95% | 6.40% | 6.50% |
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Fixed mortgage rates
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Update: This story corrects an error in the 3 and 5 year changes from SBS Bank.
11 Comments
Best not to fix your mortgage for too long as interest rates keep falling.
As floating rates are still very high, one strategy is to pick off the best 6 or 12 month rates, then return to floating for a couple of months and reassess.
Which bank will be the first to offer a rate beginning with a '4'?
Won't there be a bank run before that - surely as Steven keeps recommending, one must place one's deposit money elsewhere if the returns are not commensurate with the risk?
Household debt is still high but off historical peaks.
It stands at 156% of disposable income compared to 161% in 2007. Household debt servicing, at just over 9% of disposable income, is higher than it was a year ago, but still well below the circa 14% level evident during the GFC.
Banks have successfully lengthened the terms of a large proportion of their funding, making the New Zealand economy less sensitive to capital outflows and variation in global funding costs. Around 86% of loans and advances to the domestic financial system are being funded domestically or for terms longer than one year. Read more
The local deposit suckers are pre-positioned for OBR while the currency swapped foreign lenders liabilty is assumed to be above the indignity of unsecured loans liable to be extinguished just as though it were equity .
I agree, and have found yours and other contributors comments most useful in guiding my decisions over the last couple of years. I am starting to wonder how much further they can go down?
If GFC is our precedent than that might suggest not much further, but if the impending crisis is much worse, then maybe there is no precedent.
Hmm .. I would be careful basing decisions on these comments which are just personal opinions which often are just kite flying to provoke opposing viewpoints which helps understand mainstream thinking/planning.
Probably slightly lower interest rates until we get to a pronounced volatility stage....
Volatility is probably the order of the day for 2015/2016 with interest rates, commodity prices, countries fortunes etc, all over the place.
comments here have been far more informative than my mortgage broker or bank manager who both would have advised me to fix at more expensive rates. however I am mindful of the saying "dont try and pick the bottom of the cycle" I think I am safe to stay on short terms for next 6-9 months, but have started looking closer at the longer terms
My fixed rate on the home mortgage (which has been fixed for the last two years at 4.95%) ends in May... I'm going to give the account manager at the bank another month, maybe two before discussing with them what I'd like for the next 2-3 years (I'm not going to go for five years as a lot can happen between now and 2020)...
I have a feeling we'll see rates in the high 4's in the next 2-3 months (that's roughly where I'll be looking to fix - if I can get another 2-3 years at 4.95-5% I'll be happy).
The bottom of the cycle? I feel there will be two of these myself. I think in the next few months, the lowest we might see rates go is ~4.8% (maybe a bit lower) - and that's a maybe. With the GDP figures expected for NZ and the US this year, we might start to see the upswing in interest rates late this year I expect. And they might go up maybe 0.5-1.5% in the next 18 months (don't get me wrong - I don't expect the OCR to do this, I think this will be the banks as optimism returns to the economy and/or international funding becomes harder for them to get). A lot is going to depend on the exchange rate and forecast milk payouts, but I can easily see a short term blip in the rates...
And then in 18-24 months time - we might see another bottoming of the cycle as the world economy really hits the fan... I have a suspicion we'll see incredibly low interest rates when that happens, but by the time it happens the world will be in such a state of hurt they will need to be record lows.
I'm no expert though, and these are just my personal thoughts, and could be completely wrong, or out by years... Do what's right for you, and all the best for your decision. The way I always look at it - if you can fix your rate at lower than the average of the last 20 years - you'll usually be looking ok... the only difference this time... is when will the large crash in the world economies come? It does appear to be happening this decade - it's just when exactly...
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