Rate changes on the TSB website show that they now have a new, market leading fixed mortgage rate for three years.
They have reduced their three year 'special by -20 bps to 4.79%.
That is lower than any other bank for that term.
It even beats the HSBC Premier three year rate of 4.89%.
And it is lower than any of the main banks for that term, even Westpac's 4.94%.
This rate change comes just as HSBC ended its unique 3.87% 8 month rate for its Premier customers, reverting to 4.19% and the same as its one year rate.
The TSB rate comes with 'special' conditions: "A minimum deposit of 20% is required for home loan special interest rates. Residential loans with less than a 20% deposit are subject to availability of funds and may incur an additional low equity interest rate, while the loan exceeds 80% of the value of the home."
TSB standard three year rate is unchanged at 5.45%.
This is the latest rate reduction by banks competing for Spring home loan business. It is a tough environment this year, with house sales transactions particularly low.
ASB recently announced a sharp one year rate. Westpac has a 4.94% three year 'special'.
Not all banks are responding with sharper rates. For example, Kiwibank is offering a free holiday in Samoa with every loan of $200,000 or more applied for by November 26 and drawn down by January 18, 2018. That includes return flights for two adults to Apia, flying economy with Air New Zealand on a Seat + Bag ticket, five nights in an Ocean View Room at Taumeasina Island Resort, with daily buffet breakfast for two, return airport transfers in Samoa for two adults, complimentary use of snorkel gear, kayaks and catamarans, and 1 GB of WIFI per day for two adults.
The Spring house selling season may be a challenge for both real estate agents and bankers because transaction volumes are very low. Winning market share off rivals may be the only way business plan budgets can be achieved.
These changes come as wholesale swap rates have been pretty stable, defying upward pressure. Sharp rises in UST yields overnight on Wall Street might signal where NZ wholesale rates are going however.
And the change of Government may also keep a dampener on the real estate market, meaning that the industry-hoped-for pick up in Spring volumes now that the election is over may not happen. Uncertainty imposes a strong lid on real estate markets and it is very unclear yet on how the new Government's coalition policies will affect housing confidence.
See all banks' carded, or advertised, home loan interest rates here.
Here is the full snapshot of the fixed-term rates on offer from the key retail banks.
| below 80% LVR | 6 mths | 1 yr | 18 mth | 2 yrs | 3 yrs | 4 yrs | 5 yrs |
| as at October 1, 2017 | % | % | % | % | % | % | % |
 |
4.99 | 4.55 | 5.15 | 4.69 | 4.99 | 5.89 | 6.09 |
 |
4.95 | 4.39 | 4.60 | 4.69 | 4.99 | 5.49 | 5.69 |
 |
5.35 | 4.59 | 5.05 | 4.69 | 5.09 | 5.89 | 6.09 |
 |
4.99 | 4.55 | 4.65 | 5.09 | 5.75 | 5.99 | |
 |
5.25 | 4.59 | 5.15 | 4.69 | 4.94 | 5.89 | 5.59 |
 |
4.80 | 4.55 | 4.69 | 4.69 | 4.99 | 5.55 | 5.75 |
 |
4.85 | 4.19 | 4.19
 |
4.29 | 4.89 | 5.29 | 5.59 |
 |
4.99 | 4.59 | 4.85 | 4.69 | 5.09 | 5.49 | 5.85 |
 |
4.85 | 4.55 | 4.65 | 4.69 | 4.79
 |
5.55 | 5.69 |
In addition to the above table, BNZ has a fixed seven year rate which is 6.15%.
And TSB still has a ten year fixed rate of 6.20%.
12 Comments
Seems a rather jaundiced view of things. I'm sure the banks are quite interested in the prosperity of the punters.
From the TSB website:
No matter what changes you’re going through, you can count on us to listen, understand and work with you to achieve the best outcome for you.
Most banks make the bulk of their profits from mainstream battlers, not from prosperous customers. Yes, the banks will have wealth managers, but it's a relatively small proportion of their business.
The website copy pretty much sums up their customer base: Those who are likely to be vulnerable at times of change.
Banks always compete for clients (and therefore offer attractive rates) in any economic climate, at any time. During a recession, banks just become super picky about who they lend to and apply stricter lending criteria. So they are competing for a smaller group of better quality borrowers. The rate itself is no reflection on a change in sentiment, the credit crunch (if/when they occur) is the reflection of pessimism in an economy.
Rate changes on the TSB website today (Saturday) show that they now have a new, market leading fixed mortgage rate for three years.
They have reduced their three year 'special by -20 bps to 4.79%.
That is lower than any other bank for that term.
Given that TSB has a regulatory 35% RWA capital ratio contribution for each mortgage dollar it creates we can only expect the indefensible risk adjusted return offered to the depositors is inadequate since they underwrite the capital adequacy of the offer via OBR.
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