The second half of the year is opening with another mortgage rate cut.
This time it is challenger bank, SBS Bank, who is trimming home loan rates.
And they have positioned themselves in a competitive position, worthy of borrower consideration again.
In fact, they have matched HSBC Premier at 4.19% for a one year fixed rate and that gives them a -10 bps advantage over all their rivals for that term.
(However, HSBC Premier's 3.85% eighteen month rate is still the standout offer in the one to two year space.)
The SBS Bank cut is -10 bps and that applies to both their one year and eighteen month rates.
Their two year rate gets only a -6 bps cut to 4.49% while their 3 year fixed rate is cut by -14 bps to 4.85%.
Their four year rate also gets a -10 bps cut to 5.39%.
All these changes become effective on Monday July 2, 2018. (And they might go a small way towards offsetting Auckland's +11.5c jolt in petrol prices happening at the same time.)
All these changes are for their 'special' offers. They have not changed their 'standard' rates, nor have they changed their six or 60 month rates.
These SBS Bank mortgage rate changes follow reductions by BNZ recently, and continue a pattern of falling home loan rate offers.
Up until recently, wholesale swap rates have been reasonably stable, a track that has lasted in all of 2018. But in the past week or so, we have seen a shift lower in these wholesale benchmarks, down about -10 bps as international growth assumptions start to be pared back, and the New Zealand economy wobbles in the expectation of higher Government spending as tax collections start to shift down a gear. The RBNZ said a cut was as likely as a raise in the way they think about their official benchmark.
This shift lower might open up even more opportunities for home loan rate cuts by others.
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 June 25, 2018 | % | % | % | % | % | % | % |
 |
4.99 | 4.29 | 5.15 | 4.49 | 4.85 | 5.85 | 5.99 |
 |
4.95 | 4.29 | 4.39 | 4.49 | 4.79 | 5.39 | 5.59 |
 |
5.35 | 4.29 | 5.05 | 4.49 | 4.85 | 5.89 | 6.09 |
 |
4.99 | 4.35 | 4.39 | 4.85 | 5.19 | 5.39 | |
 |
5.25 | 4.29 | 5.15 | 4.49 | 4.85 | 5.89 | 5.59 |
 |
4.80 | 4.29 | 4.45 | 4.55 | 4.89 | 5.39 | 5.59 |
 |
4.85 | 4.19 | 3.85 | 4.29 | 4.89 | 5.29 | 5.59 |
 |
4.99 | 4.19
 |
4.49
|
4.49
|
4.85
|
5.39
|
5.55 |
 |
4.85 | 4.29 | 4.39 | 4.55 | 4.89 | 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 10-year fixed rate of 6.20%.
5 Comments
I expect we'll see others follow suit early next week. In the absence of any real pricing strategy or product innovation they are all directly competing. This is exactly what every B-School advises against and must surely signal the autumn of good times for banks.
To those who want to listen, don't fix long. I've been saying for 2 years that interest rates are not about to rise (at times when many business commenters were saying they will rise imminently) and I am now even more convinced that rates are not rising in NZ (despite the rises in the US). The reason, in simple terms, is that the world economies are just too sick and too awash with debt to sustain any meaningful interest rate rises.
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