Kiwibank has announced a 6 month mortgage 'special' at 4.99%, which is below its normal 6 month rate of 5.65% and only applies to borrowers with a minimum of 30% equity in their property.
Kiwibank Chief Executive Paul Brock said it was the lowest rate ever offered by the bank and significantly undercut the other main banks, who are grouped around 5.7% with their 6 month rates.
“We’ve seized an opportunity to offer what we believe is a startlingly low home loan interest rate. We’re looking to grow our mortgage portfolio and to pass through savings to customers,” Brock said.
Kiwibank said the 6 month special was only available for those with at least 30% equity, otherwise the banks standard 6 month rate of 5.65% applies.
Kiwibank said the rate "will only be available for a limited time."
42 Comments
This is an attempt by Paul Brock to strengthen the quality of his mortgage lending portfolio. He needs the addittional equity that this rate hopes to attract; and he is prepred to pay for it. However, whatever the market's 'normal' rate will be in 6 months time for a short run/floating , it will not be 4.99%...it's likely to be...much lower.
Yep....I think its a way to get in the BBs etc who are earning good money and have little mortgage left.....Im probably going to go for it....6months for a safety margin while this blows up is worth it IMHO....im hardly going to pay any money over the odds for that certainty.
regards
I agree, but also those with low equity probably have good incomes as well....
I dont see how it can go much lower....but given I cant see the EU lasting six months, indeed xmas Im all for getting this....it means certainity at little cost, it might actually be cheaper.
What risks / negative aspects have a fixed over floating? I cant see much in 6 months.
regards
Ta Mist, guess I'm really questioning the best way to compare the quality of the lenders, other than just what rate is on offer. I may,for example, prefer to go with a lender that doesn''t allow 'mortgage loans' to fund anything that isn't owner-occupier housing, or one that doesn't lend to prospective landlords... 'the quality of his mortgage lending portfolio' seemed quite a nice measure (if such a thing could be quantified). I suspect it means no more than 'less risk on the behalf of the bank'.
Hi Steven
Avoid the temptation to assume that if it hasn't happened already, it won't. I speak from experience. But, if you are after a safety margin while the current situation plays out, you might look at a little more than 6 months. This is a slow train wreck.
Regards
Haggis
Isn't this thread a cue for SK et al to give us 10 valid reasons why this will never happen ??
C'mon, no one can touch property values in Auckland .... we have imprinted on our foreheads "ya can't lose......... " need I bother saying anymore ..... I'm just glad I have diversified.
am certainly not in the sk spruiker brigade. Just the dire predictions of a property crash in NZ have not happened, in reality the opposite is happening in most areas in Auckland and the so called balloon keeps rising. Clearly there are other forces at play in Auckland.
So until i see that massive 30%- 50% drop am sticking to my guns.
Ps i'd love nothing more than to see a substantial drop in house prices and see younger kiwis buying a home.
I'll bet,frazcam, the Japanese didn't think their prices would fall 50%+, either! Now sure, 'we' are all different. But the thing is, property prices can, and do, move in all sorts of unexpected ways ( ask Olly Newland apres 1987!).
"Japanese prices didn’t fall all at once. It was a long horrible drawn out process. Sure residential land prices ended up down, going on 70%. But they didn’t reach that point until 2005..."
The problem is NA that the same people keep harping on about prices dropping so much. Then when there is a slight drop they all jump up and say "I told you so - here we go" - next month the prices are back up.
Japan is one country - that is all. I am sure there are plenty of places where prices keep rising - just look across the ditch. It's a bit nearer.
Anyway a friend of mine in Japan has just told me that house prices near Fukishima have dropped by 90% - you may be right NA.
Demand for houses doesn't disappear. But the capacity to pay for them does. The need for the 'savings' tied up in property both squeezes those captured saving out and stops 'new' saving being put into property( especially if new purchases are not at an economic level to support them on their own ie. the rent = all outgoings, independent of tax treatment - which can change at whim). So property goes into a long, slow decline. Death by a thousand cuts, in other words, as it's difficult to see a 'bottom' to either buy off, or sell before it's reached. So property declines in relative value compared to income producing assets, which can be just plain old cash.
However, GE notified customers this week of a 1.3% rise in interest rates - which brings their GE Creditline rate to 28% from Dec 1. Due to "rising cost of funding & increasing costs to support the (monopoly Hire Purchase/revolving credit for consumers at dept stores)". Will this be included in the Govt crackdown on sharp moneylending practices? Perhaps the new ethical advertising will be "Interest free at Norman Harvey for 12 months but thereafter 28% on outstanding balances".
Well, I guess it's a good product for disciplined people. Use the interest-free period for the new Laptop, pay it off completely. But for low-income or undisciplined people the penalty is carrying a balance at 28% - also it's revolving credit tempting you back to debt again - whereas an old-fashioned HP meant people paid it off - then the account disappeared and they had to reapply at the next HP purchase. As well as the monopolistic effect of GE dominating all consumer credit .....
Do this customers know, how much they really are paying?
http://www.chrismartenson.com/forum/10-trillion-geometric-error-us-inte…
Can one go to Kiwibank and ask to refinance with them or is it only for purchase of new properties? It doesn't pesonally interest me as have all properties, residential rentals and commercial mortgage-free by April, 2012, but in principle it sounds good if one could refinance from an existing floating loan with another bank.
I think you can refinance - but only if you have 30% or greater equity. KB are trying to attract the 'safer' customers by offering them a short term fixed rate. I don't think it will appeal to many first time buyers as very few would have 30% equity in their properties.
Not really much to consider - after all it is only a 6 month fixed rate. Now considering a 5 year fixed rate would need some thinking. We had 5 mortgages and then consolidated them into two - we just look at the best rate for the longest erm and fix then - floating is not the best for us.
I have one question - perhaps you can help me out? All the slagging off of the Aussie banks that goes off in the media and how good KB is - how come KB doesn't discount like this regularly to bring the 'Aussie Banks' into line? The other thing we forget is that the Aussie Banks probably employ more Kiwis that KB does - KB can't get more stripped back than it already is.
It gives us all a clue, SK, as to the likely direction of the economy .What people in general do with whatever 'savings' they have will determine the future direction of our country. I'd like to know because it keep me abreast of popular thinking, even if it is 'put it into another renter'. Wouldn't you also like to know?
Information is power, SK. Without it, descison making is, at best, a guess. You, surely, must have looked at all sorts of info before you launched into the property game? I'm sure you didn't just say," Well, what worked in the past must work in the future. I think I'll give it a go" Too many variables change as time goes on, for that to be so.
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