After the dramatic rate drop by HSBC Premier (which is still available), the next move in the home loan rate market is, perhaps surprisingly, up.
BNZ has retreated from its sub-4% two year fixed rate, raising that rate by +30 bps to 4.29% and matching nearly everyone else.
At the same, they have trimmed -10 bps from their noncompetitive one year rate, although even after the change, the resulting 4.10% level is still not rate competitive with any of their main rivals.
Update: Westpac has also now raised a series of rates, and dropped some 'specials' in a broad move higher for its rate offers.
These changes come even though wholesale swap rates for one year have been stable for 5 months, and two year swap rate has fallen -10 bps in the past month (although today's level is +10 bps above the general level over the past four months).
Retail term deposit rates, the main source of bank funding, aren't moving either. (Although BNZ did take the opportunity today to reduce its RapidSaver bonus saver product by -10 bps.)
BNZ's changes are probably a signal that the imperative to be in the market with low rates is lower as the Spring house selling season draws to a close. And the great bulk of the loan rollover end-of-year surge has now passed, so the pressure from that source has lessened too.
The main feature of the competitive rate profile is how bunched the main banks are around the same rate especially for some key terms. A few challenger banks are trying to find pricing points that give them a profile difference, but the main banks are clearly trying to avoid advertised carded rate competition, preferring to respond to customers only when pressed on individual deals.
The latest margin data shows this remains stable, with BNZ and Westpac having the lowest net interest margin of 2.1%, ANZ and Kiwibank stable at 2.2% and ASB the highest at 2.3%. The net interest margin measures the difference between the interest earned from customers, less the interest rate banks paid to depositors and lenders, as a percentage of average interest-earning assets.
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 November 30, 2018 | % | % | % | % | % | % | % |
ANZ | 4.99 | 3.95 | 4.85 | 4.29 | 4.49 | 5.55 | 5.69 |
4.95 | 3.95 | 4.29 | 4.29 | 4.49 | 4.95 | 5.09 | |
4.99 | 4.10
|
4.79 | 4.29
|
4.49 | 5.19 | 5.39 | |
4.99 | 4.05 | 4.29 | 4.49 | 4.99 | 5.09 | ||
4.99 | 4.15
|
4.79
|
4.29 | 4.59
|
5.29 | 5.49
|
|
4.10
|
4.10 | 4.29 | 4.35 | 4.49 | 4.99 | 5.15 | |
4.85 | 3.79 | 3.85 | 4.19 | 4.69 | 4.99 | 5.29 | |
4.99 | 4.19 | 4.49 | 3.95 | 4.49 | 4.89 | 4.89 | |
4.85 | 3.95 | 4.19 | 4.19 | 4.49 | 4.95 | 4.99 |
In addition to the above table, BNZ has a fixed seven year rate of 5.95%.
And TSB still has a 10-year fixed rate of 6.20%.
Fixed mortgage rates
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46 Comments
Nobody says “the only way is up” when it comes to NZ property. You won’t find an example of even the most eager spruiker on this site ever saying that.
“No real return on investment anywhere”? Rental return in Invercargill is 9%. 6.8% South Dunedin. 8.5% Wanganui. 8.4% Hastings. 7% Holdens Bay/Owhata/Ngapuna. 7.2% Woolston/Opawa.
“No real return on investment anywhere”? Rental return in Invercargill is 9%. 6.8% South Dunedin. 8.5% Wanganui. 8.4% Hastings. 7% Holdens Bay/Owhata/Ngapuna. 7.2% Woolston/Opawa.
So the most compelling ROI in NZ is renting houses to the country's low-income, urban households. For the investment to be more attractive, you want a greater proportion of serfs.
You’re not a property person are you? Quality of tenant is not a variable that affects one region’s yield in comparison to another. There are plenty of actual reasons that these areas have lower property values in relation to rent. I’d try educate you, but I get the impression it would be an exercise in futility.
You think rent as a proportion of property value is higher in some regions because WINZ? Why would WINZ pay a higher rate of rent as a proportion of property value in one area compared to another? Do you think that beneficiaries are such a high proportion of the population in places such as Invercargill that WINZ is setting market rent? You’ve not thought this through.
Anticipated capital gain differences is one reason yield varies between regions.
Because maybe Winz helps subsidize the living costs in those areas? No, wait, it's the job market in those areas that supports the yields my bad.
Welfare sets a price floor. Welfare is typically state provided. Private landlords are able to capitalize on the desperation at the bottom end because to a certain point the state will front up for the costs, otherwise they're putting people in hotels for $100 per night. These people are normally struggling to pay rent without help from WINZ, let alone buy a house.
Does this make any sense to you or are you still dense on this logic?
Answer me this - if WINZ benefits are causing rents to be high in relation to property value, why don’t property values increase to reflect this (I.e. why would investors buy in Auckland at 3.5% return when they could buy in Invercargill at 8%, which would gradually push prices up in Invercargill until the yields are equal).
Yeah for sure sharetrader.The only way i see house prices drop dramaticly is if interest rates rise.Although i am seeing massive price reductions on Sydneys northern beaches.Some houses for sale for over two months having price reductions of up to 200 k.Thats for a stand alone home.Apartments are going cheap too.Now how do i time the bottom????
Not the whole way.
Local councils in a downturn find new and interesting ways to justify their existence. Regulatory zeal accelerates quickly as underemployed officialdom look to demonstrate how indispensable they are protecting communities, the environment, health, tangata whenua, aesthetics and most importantly their own backside's.
Ok. So BNZ and Westpac did a 'Briscoe's' - had a sale for a 'limited time' and dropped prices.
And we know from experience what that means don't we!
(1) "Briscoes" sales just reduce prices to the norm charged by other retailers, and
(2) There's another sale coming along any tic!
Lock in now at 4.29%, or 3.99% when it comes around again, if that suits, but don't be surprised when 'Briscoe's' comes along with a better offer - much better.
More likely the banks realised that super low interest rartes sent the wrong message that prices were falling so support was needed. It has had the opposite effect and only increased the house price worry. Cut prices on anything and the suggestion is an element of desperation.
Firstly, when BNZ first announced this rate they said it would be for a limited time and would end in early December. Seems they ended it slightly early, but the article here doesn't seem to acknowledge that it was always advertised as a limited offer, just like Kiwibank's offer a few months ago was.
Secondly, I have just over a million in mortgages with BNZ, I broke all of them and re-fixed on the 24 month rate - if it had only been for 12 months I probably wouldn't have bothered, but 24 months is worth it. After accounting for the early break fees, I'll be saving $10,000 in interest costs over 24 months (little bit of a fuzzy calculation as 2 of the fixed portions only had 12 months left each). I'm keeping repayments the same, so basically I've now got $10k in early repayments that I otherwise wouldn't have had.
Quite happy with how it all worked out, and I doubt rates will get much below 3.99% at any of the main banks in the next 24 months.
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