ASB has cut fixed home loan rates across the board, according to updates that have appeared on their website this morning (Thursday).
These cuts give them market-leading positions for 18 months fixed, as well as for 3 year, four years, and five years.
And their two year fixed rate of 3.69% beats all other banks for that term other than China Construction Bank. This level also matches ANZ's, BNZ's and Westpac's new low one year rate.
ASB recently closed a wholesale funding round, raising $600 mln at the remarkably low rate of 1.83%. Given ASB's market share, that will only be enough for a few thousand mortgages, but it is a good advantage anyway.
At the same time, ASB has cut most of their term deposit rates. We will update where the market stands for term deposit rates in a followup story soon.
Wholesale swap rates have held at their new lower level so far all this week, but after today's market rout, it seem slikely that they will sink further from here too.
Here is the full snapshot of the advertised fixed-term rates on offer from the key retail banks.
| Fixed, below 80% LVR | 6 mths | 1 yr | 18 mth | 2 yrs | 3 yrs | 4 yrs | 5 yrs |
| as at August 15, 2019 | % | % | % | % | % | % | % |
| ANZ | 4.29 | 3.69 | 3.99 | 3.75 | 3.99 | 4.85 | 4.95 |
 |
4.29
 |
3.75
|
3.75
|
3.69
|
3.89
|
4.19
|
4.29
|
 |
4.79 | 3.69 | 4.55 | 3.75 | 3.99 | 4.35 | 4.45 |
 |
4.79 | 3.79 | 3.79 | 3.99 | 4.29 | 4.39 | |
 |
4.99 | 3.69 | 4.79 | 3.75 | 3.99 | 4.35 | 4.45 |
| Co-operative Bank | 3.79 | 3.79 | 3.79 | 3.84 | 3.99 | 4.29 | 4.39 |
| China Construction Bank | 4.70 | 4.85 | 3.65 | 3.90 | 4.95 | 4.95 | |
| ICBC | 5.15 | 3.79
|
3.79
|
3.75
|
3.99
 |
4.29 | 4.39 |
 |
4.85 | 3.79 | 3.79 | 3.79 | 3.89 | 4.19 | 4.29 |
 |
4.99 | 3.78 | 3.78 | 3.78 | 3.99 | 4.49 | 4.49 |
 |
4.55 | 3.85 | 3.89 | 3.79 | 4.05 | 4.45 | 4.55 |
In addition to the above table, BNZ has reduced its unique fixed seven year rate by -25 bps to 5.70%.
All carded, or advertised, term deposit rates for all financial institutions for terms of less than one year are here, and for terms of one-to-five years are here. And term PIE rates are here.
Fixed mortgage rates
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48 Comments
Not to worry Zachary old mate, by this time next year the mortgage rates will be down to the mid 2% mark and perhaps lower. Ahhh.. wait you did say you fixed for 3 years..... Ahh well. Any luck we might be out of the latest Asia finical crisis when you next have to renew your mortgage.
For those who some time ago question my view that "lower interest rates will be bad for mortgage holders/property owners" (or words to that effect!), have a look about you this morning. What do you see? I'll tell you what I continue to see - mortgage rates half what ASB offers today and asset prices backed by borrowings, fallen in a heap.
Borrow today, by all means, but don't apply the debt; 'save' it for use at some time in the future....(NB: Use an Offset Account to park funds - costless, because come 'tomorrow' banks may not be wanting to lend to you. Get it whilst you can etc)
You need to get used to him not making sense.
I can only guess that he means with lower interest rates, buyers of commercial will accept lower yields, hence driving asset price inflation (bubble).
Obviously "lower rates don't lead to lower yields" they increase your yield.
That's OK, ZS many don't understand yields properly and Miss The Point. Easiest way to understand it is via an example.
A buyer of a commercial property would be looking at being at least cashflow neutral so he would want to get a yield similar to the cost of borrowing which is about 5.5% for commercial (note outgoings are generally paid by the lessee). If the cost of borrowing drops by say 0.5% the buyer will also accept a lower yield, hence the price of the asset goes up
Example: you own a property that generates $100k pa in rent and has a yield of 5.5% so it's worth $1.818 M ($100k/5.5% if the yield drops to 5% the values goes up to $2 M ($100k/5%
Lower borrowing cost => lower yield => higher asset price
You need to sort your English out. Lower borrowing cost does not equal lower yield.
It leads to buyers accepting a lower yield when purchasing as I have stated above. This is not what you first stated.
If I own a property commercial property and my interest rates drop my yield rises.
Yeah I assume I've won the argument when they resort to attacking your punctuation, English etc. I get it a lot in the American forums I participate in, where they can't comprehend spelling / grammar is different in different parts of the world ( I do try to use their spellcheck when posting).
Saving, say, $500 per week on interest cost when the asset underlying the borrowing it is secured by is falling thousands of dollars a week will prove to be a false economy - it's one of the Roads to Ruin. Maybe property hasn't started the 'thousands of dollars a week' depreciation yet ( that's what all this futile rate cutting is partially about) but if that ever gets going two things will happen:
(1) 'Owners' will become trapped with their assets; some, perhaps many, will have to sell ( either voluntarily or by 'request' of their lenders) and
(2) Mortgage rates will get savagely cut, even more, to try to forestall the inevitable. ( Rinse Point (1) and repeat....)
We'll all know how it pans out in the, not too distant future!
Given that these cuts are aimed at stimulating the economy it would be interesting to see what the rate delta is for fixed loan customers and the volume of lending taking over that would benefit. Like an overview of how many additional dollars are being freed in the economy by falling retail rates.
People that don’t own property now should seriously be looking to buy!
You will miss out again if you wait and believe everything you read on here about prices crashing.
What other investment gives you the return and security that property does and that is why it is so popular.
You can still obtain returns far in excess of Term Deposits and certainly far safer than the sharemarket which nothing surer will have some black days in the future.
From my initial investment 8 years ago in my business, I made a return of 200% last financial year, and I didnt have to sell the assset, and its actual cash. The asset is worth roughly 4 times the money I invested at the outset. Housing could never do what this has done for me.
The only reason I would buy a house is to live in it, but I feel like black days are coming in the housing market, and probably every market. Housing is popular, because everyone needs one to live in. Its like saying water is popular.
For the first few years I worked all the hours God gave me, its a bit different now, this year Ive had 2 months out of NZ on holiday. Sure i still do some 12 hour days, but I also do some 2 hour days, I like working. We import/export/distribute product all over NZ and the South Pacific.
I will tell you exactly how I bought my first property with no money of my own. I got 80% mortgage from the bank and I asked the vendor to leave the remaining 20% in as a second mortgage in exchange of paying full asking price, he agreed.
See there are always ways if you spend your time trying to make something work rather than spend your time sarcastically belittling others and look for every reason why something won't work
That story is getting a bit old, I've heard it at least 3 times now. Yawn.
So you and The Man 2 are the same person?
https://www.youtube.com/watch?v=EuJzSTNDUGI
Gotta subtract your own cost as a manger form those profits sluggy. Depending on what you paid it may actually be a very bad performance. The more you paid the better the performance but if you didnt spend much then your own time is a major factor to consider. Consequently the data you presented by itself does not help anyone understand if your purchase actually did outperform property.
Bad day again in the US stock market. Trump is jumping up a down like a loony. My exact words on the news with regards to Trump "Not wanting a crash on his watch" that I applied to the Labour party a while back. The OCR rate has been cut because a blind man can see the problems coming before the next OCR review, they are just getting ahead of the curve. The big question is how are we going to handle it ? borrow even more and keep the housing market going or is it going to fall off a cliff ?
We are now in uncharted waters, anything is now possible. Timing will be everything. Once the panic starts, who knows where it will end. We are not far from any situation. While unemployment is low its all great, loose your job...cannot pay the mortgage....it goes bad pretty quick.
Yvil, I'm not so worried about me, currently all cashed up, I'm worried about others currently in debt up to the eyeballs. You shouldn't be as naive as to think that the plight of the masses somehow will have zero effect on you. You would be worried if you woke up one morning and found out you were in negative equity in a big way.
Good on you for being in a good financial position. Then don't worry about others… worrying is a horrible feeling, it's a feeling that something may (or may not) happen in the future. In actual fact right now is fine, so if you worry now about a potential bad thing in the future, you're robbing yourself of the present time, which is actually fine.
Wouldn't be so bad if property prices had gone up at 3 or 4 % per year but the last RV in 2016 had the price of my property going up 46% in 3 years. People have now bought at the current prices and the potential for falls are the same as the gains if the right set of worldwide conditions come about.
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