Kiwibank has announced a 3.85% two year fixed rate 'special'.
This is the lowest two year rate on offer by any major bank and is only bested by China Construction Bank's two year 'special of 3.65%, and HSBC's Premier 'special' of 3.79%.
Kiwibank's new two year level, involving a -14 bps reduction, continues the steady drift lower for fixed term rates and their move will see competitor matching in all likelihood.
The State-owned bank now has both its one year and two year fixed rate 'special' offers pitched at 3.85%. Their 'specials' only require you have at least 20% equity. And unlike most of their rivals, they don't actually require you to shift your salary crediting to one of their accounts or require you to commit to other products.
Today's change is effective on Monday, June 10, 2019. Kiwibank did not announce a matching term deposit rate cut, but they are still offering savers 3.25% or 3.20% for the popular six, nine and twelve month TD terms.
The two year fixed rate has been one that has not been cut as aggressively as most other terms. Two months ago, the average bank two year rate was 3.97%. Today that average is 3.93%, a drop overall of only -4 bps. That contrasts with the one year fixed rate which has fallen -13 bps from 4.04% to 3.91%. The three year average fixed rate has fallen -35 bps from 4.35% to 4.00%. And the five year fixed average is down -45 bps from 4.94% to 4.49%.
Today's move by Kiwibank ends a week with little mortgage rate action.
Since the beginning of May, wholesale swap rates have fallen more than -25 bps to record all-time lows. Since the beginning of June, the reduction has been -5 bps. Wholesale markets are keying off what they think Adrian Orr thinks.
Over the past two months, a combination of wholesale rate falls and matching term deposit rate cuts has allowed banks to reduce home loan rates while maintaining their net interest margin.
And don't forget that TSB is offering "a cash contribution of up to 0.50% of the total loan amount, up to a maximum of $4,000" until June 15. There are conditions of course, but many borrowers should be able to meet those. TSB does not price-match Kiwibank offers.
See all banks' carded, or advertised, home loan interest rates here.
Here is the full snapshot of the advertised 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 8, 2019 | % | % | % | % | % | % | % |
| ANZ | 4.99 | 3.89 | 4.19 | 3.95 | 4.05 | 4.85 | 4.95 |
 |
4.95 | 3.95 | 4.19 | 3.89 | 4.05 | 4.35 | 4.45 |
 |
4.99 | 3.89 | 4.79 | 3.95 | 3.89 | 4.35 | 4.45 |
 |
4.99 | 3.85 | 3.85
 |
4.09 | 4.29 | 4.39 | |
 |
4.99 | 3.89 | 4.09 | 3.95 | 4.05 | 4.35 | 4.45 |
| Co-operative Bank | 3.95 | 3.95 | 3.99 | 3.99 | 4.05 | 4.35 | 4.45 |
| China Construction Bank | 5.15 | 5.10 | 3.65 | 3.90 | 5.30 | 5.30 | |
| ICBC | 4.85 | 3.99 | 4.19 | 3.99 | 4.49 | 4.29 | 4.39 |
 |
4.85 | 3.79 | 3.79 | 3.79 | 3.89 | 4.19 | 4.29 |
 |
4.99 | 3.89 | 3.89 | 3.99 | 3.99 | 4.49 | 4.49 |
 with price match promise |
4.85 | 3.89 | 4.09 | 3.89 | 3.89 | 4.35 | 4.45 |
In addition to the above table, BNZ has a fixed seven year rate of 5.95%.
Fixed mortgage rates
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27 Comments
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In 2009 and 2010, Sweden and, in 2012, Denmark used negative interest rates to stem hot money flows into their economies. In 2014, the European Central Bank (ECB) instituted a negative interest rate that only applied to bank deposits intended to prevent the Eurozone from falling into a deflationary spiral.
Nonsense TTP. Deposit rates may go below zero, but borrowing (ie mortgage) rates can never reach zero otherwise asset prices would become infinite. My original point was that there's no mathematical limit to the number of times **mortgage** rates can be reduced. Changes should be specified in percentage terms. If the old borrowing rate was say 4.25% and the new rate is say 3.85%. Then the difference value of 0.4% meaningless. It's the percentage reduction, 9.41% using this example, that matters because that how much your yearly interest payments are reduced by.
Look at it this way Zach:
A) rates go down over the next 3 years, you're better off with 1 yr as you can lock in cheaper rates each year
B) rates go up over the next 3 years, you have a nasty surprise when you renew in 3 years time. If you go with 1 year you can fix long in 1 year
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