Hard on the heals of rate cuts from its main rivals, Kiwibank has trumped them all with even lower fixed rates.
Its new one year fixed rate is now 3.55%.
It new fixed two year rate is 3.65%.
Both are market leading and the one year rate is the lowest-ever rate for a fixed term mortgage of any term.
These changes come after wholesale swap rates fell on Thursday to new records lows.
The new Kiwibank rates involve an impressive cut of -24 basis points for the one year rate and -14 bps for the new two year rate, and this positions them much lower than all their main rivals in the big Aussie banks.
Is this as low as it will go? It seems unlikely.
Will others follow or go even lower soon? Very likely, especially for the small challenger bank branches that are essentially wholesale funded.
This sinking trend still has further to go. But it would not surprise us if the majors now hold back a bit until the Spring real estate season gets into gear. The current low rates won't hurt that season's prospects.
But with Kiwibank now out there with a 3.55% rate, the others will be under pressure to match it even if they don't shift their advertised carded rates.
The next threshold, given the aggressive flattening of the curve in both the wholesale market and the retail term deposit market, is likely to be sub-4% rates all the way out to a fixed five year term.
At the same time, Kiwibank has cut all its term deposit interest rates with the reductions ranging from -10 bps to -25 bps. For the popular 6 month term the cut is -15 bps, and for one year it is -10 bps. The heaviest cuts came for the shortest terms.
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 | 3.55
 |
3.65
|
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 a unique fixed seven year rate of 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
Select chart tabs
44 Comments
Give it another year or two when the Asia recession really kicks in (Unless they can push Trump out of office before then). And we'll start to see mortgage rate fall even more significantly to stave off a property crash. You may see rates around 1.5% depending on your LVR (Loan to value rate).
Looking at the UK HSBC mortgage rate for a two year fix, they're currently at 1.54% if your borrowing at 80% LVR. Their best rate is 1.34% if you're borrowing at 60% LVR.
https://www.hsbc.co.uk/mortgages/our-rates/
Yes I have to admit that I was surprised that Kiwi and Ozzy Landlords didn't have any or very little mortgage constraints apart the the LVR for investors but that wasn't introduced to quite late in the game Oct 2015. So Landlords in the UK have to get their mortgages via a Buy to Let mortgage which is now at a higher rate than a standard residential mortgage. But before the GFC they were at a much lower rate than standard mortgages, which was very frustrating to FTB's trying to get on the property market. Now the tables have turned like the are here in favor of First time buyers.
Sure we have, housing increased at a faster rate over 2002-2007 than 2012-2017. I was there I clearly remember reading countless articles saying exactly the same as many posters here today. "house prices cannot possibly go higher it's just impossible, the crash is imminent"
Hi Nymad,
Yes - of course oscillations occur in economic activity. And they do so continuously.
But try comparing NZIER's comprehensive business cycle database [QSBO - available since 1961] with any housing price series with which you (might be) familiar. You'll soon find that recessionary levels of activity have a very weak correlation with falling house prices.
Similarly, sharemarket indices have a weak correlation with the business cycle.
The above effects are well-known and well-documented.
TTP
Similarly, sharemarket indices have a weak correlation with the business cycle.
Interesting comment.
I'd be very interested in any evidence you have for that one. It's definitely not a mainstream view...
You'll soon find that recessionary levels of activity have a very weak correlation with falling house prices.
I don't know what you mean by recessionary levels of activity correlated with falling house prices means. No one correlates a non continuous time series.
Though, I do know that economic growth is highly correlated with house price growth, though. Through symmetry that means negative economic growth is correlated with negative house price growth.
The question of causality might be in question, but I think cointegration in levels and correlation in growth aren't really disputed..
Yes you do - or you shouldn't bother coming here.
Sharemarket activity/indices is not a close/reliable indicator of business cycle activity and vice versa. At best, any relationship is controversial.
That's a likely reason why macroeconomic modelling and policy discussion typically assign a relatively minor role to the sharemarket in investment decisions.
TTP
Dealing with theoretical models and reading literature vs actual life experience of "been there, done that"
Is the next All Black's coach going to be someone who has read all the rules of rugby really well and has modelled the psychology of team work or someone who has played and coached ruby before???
No, as usual, you are being disingenuous. See Box 1, Figure 5. Every recession in the last 100 years has coincided with periods that had falls in real house prices.
https://www.beehive.govt.nz/sites/default/files/Past_recessions.pdf
An interesting quote from the conclusion:
Financial excess reflected in overvalued asset prices, or indeed the subsequent financial fragility, often seems to be associated with some of the deeper recessions here and abroad.
We have never had 1.2 trillion in housing wealth before. The flow on effects of a small percentage fall is magnified.
https://i2.wp.com/www.greaterauckland.org.nz/wp-content/uploads/2016/07…
After peaking in 1974 it took how many years to reach the previous high, in a period of significantly higher inflation. Maybe the RBNZ data is wrong ?
TTP your forgetting that times have changed in NZ and that there's no more foreign buyers to hold NZ property aloft out of the grips of a recession, haven't you noticed the banks rapidly dropping their mortgage rates. Humm not sure if the mortgage rates in NZ have ever been this low for customers. Apparently in the 1980's they were ridiculously high and since then they've slowly reduced, with the recent bank panic acceleration to reduce them further to help wage earner and resident investors to afford property.
Remember that the mortgage interest rate during the "great depression" in NZ was 3.75. The resulting credit crunch affected both the government and the business economy. People were out of work and couldn't pay rent so landlords chucked them out. Are we there yet?
Yes that's the downside that Landlords forget calculate for when people can't afford the rent (As a previous Landlord I've already experienced that effect during the GFC). Then you see that Landlords have to drop their rental prices especially when immigration start to reduce further.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.