Despite today's sharp fall in wholesale rates, Westpac has announced a rise in their floating mortgage rates.
They are all up +11 bps.
That takes their floating rates to 5.95%, the highest floating rate in the market at this time and the highest level since December 2015 (when it was 6.00%).
Westpac's changes for the mortgage rate are effective for new customers on 16 June 2017, and for existing customers on July 7, 2017.
For perspective, here is the recent change history for Westpac's floating rate product:
| Westpac change history | Change | Floating |
| % | % | |
| Start of 2016 | 5.85 | |
| March 10, 2016 (the -25 bps OCR reduction) | 0.00 | 5.85 |
| March 11, 2016 | -0.10 | 5.75 |
| August 12, 2016 | -0.10 | 5.65 |
| August 16, 2016 (the -25 bps OCR reduction) | 0.00 | 5.65 |
| November 22, 2016 (the -25 bps OCR reduction) | 0.00 | 5.65 |
| February 9, 2017 (the no-change OCR decision) | 0.00 | 5.65 |
| March 1, 2017 | +0.10 | 5.75 |
| March 23, 2017 (the no-change OCR decision) | 0.00 | 5.75 |
| April 6, 2017 | +0.09 | 5.84 |
| May 11, 2017 (the no-change OCR decision) | 0.00 | 5.84 |
| June 16, 2017 | +0.11 | 5.95 |
Here is a snapshot of the current floating rates offered by key retail banks and their recent change history:
| below 80% LVR | as at Dec 31, 16 |
as at Jan 31, 17 |
as at Mar 31, 17 |
as at Jun 15, 17 |
| % | ||||
 |
5.59 | 5.69 | 5.79 | 5.79 |
 |
5.65 | 5.80 | 5.80 | 5.80 |
 |
5.64 | 5.79 | 5.90 | 5.90 |
 |
5.25 | 5.40 | 5.55 | 5.70 |
 |
5.65 | 5.65 | 5.75 | 5.95 |
 |
5.55 | 5.55 | 5.65 | 5.75 |
 |
5.59 | 5.59 | 5.59 | 5.79 |
 |
5.59 | 5.54 | 5.79 | 5.79 |
 |
5.54 | 5.54 | 5.65 | 5.80 |
Westpac has launched a 3.50% eight month term deposit 'special' term. How long that is available has not been advised.
All current mortgage rates are here.
32 Comments
It's hard explaining to people that what happens here and specifically the OCR is only one factor in the equation. With the Federal Reserve hike yesterday it makes sense that they put the rates up. We'll see more by the end of the year due to what is happening in Australia and the Fed signalling at least one more hike this year.
The only thing you need to explain to borrowers is that if your mortgage costs 4% per annum and it goes to 6% per annum , your instalments go up by half , or 50%
So if you are paying $600 a week for your hovel in Auckland , you need to find $900 a week at a 6% mortgage rate .
This is when people who have stuck their necks out , start to get into trouble
All the Ozzy banks are under quite a lot of pressure with huge numbers of over leverage home owners who tried to compete with foreign buyers on massively over priced property. Now we're in a fine mess.
Article, The Australian: Mortgage noose tipped to see property prices crash by 10 per cent
Quote: A crackdown on interest-only home lending could trigger price falls of up to 10 per cent in the red-hot markets of Sydney and Melbourne, economists warned yesterday.
“The latest moves by APRA, coming on the back of bank mortgage rate hikes over the last two weeks, the likelihood of action to boost affordability in the May budget (including a cut to the capital gains tax discount), and the surge in unit supply at a time of silly prices, are all likely to result in a slowdown in property price gains in Sydney and Melbourne this year ahead of a 5-10 per cent price fall starting next year some time,” he said.
http://www.theaustralian.com.au/business/property/mortgage-noose-tipped…
David it would be interesting to see a plot of time vs. mortgage interest rates as an index or average of the major NZ banks for floating, 1 year and 2 years fixed. Then overlay the OCR. I think that would really show the magnitude/trend and what's going on. Just my two cents.
Paradox - go to page 19 of the RBNZ's last MPS and view and understand the bottom left graph, that's the major part of the banks problem
http://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Monetary…
Why float at 5.95% , when you can fix for 6 months at 4.19%? If you cant manage your finances for 6 months ( more likely the first 3 months, after which I reckon you would still come out ahead if you had to break and pay break fees), then i would say you are in deep poo regardless.
I suppose what it really effects is the revolving credit type mortgages, which seem to be based on the floating rate.
Originally, the idea of the floating rate was that the borrower took more risk, but benefited from rate movements downwards, while accepting the risk of hikes, but now floating has a hefty premium built continually in to encourage borrowers to get locked in with lower fixed rates.
Paying down extra house debt on a regular basis will reduce the total amount of interest paid versus balloon payments in the long run.
I don't own a house so raiding the coffers isn't a problem for me! :) It would be a problem for less financially savvy people, though.
So, currently, what is the 'reward' for borrowers to float?
Under the current deflationary, low interest environment, will 'floating' ever fall? Or ever be lower than any fixed rates?
The only benefit seems to be to allow flexibility to allow the borrower to switch banks and to repay extra anytime. There are no rate benefits.
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