Home loan rates go even lower

Personal Finance

China Construction Bank launches a 3.19% mortgage rate for fixed terms on one, two and three years, easily the market leading offers for any home loan

11th Sep 19, 8:07am by David Chaston

Whoa!

The market leading home loan rates have fallen sharply again.

Our monitoring of China Construction Bank's New Zealand website shows that they are now offering 3.19% for fixed terms of one, two and three years.

That is -16% bps lower than the recently announced hot rates by HSBC for their Premier offers.

3.19% is unprecedentedly low for a fixed rate mortgage.

If your loan amount is, say, $500,000, a 3.19% will save you $1,500 per year compared with the 3.65% rate that most large banks are offering for one year.

This latest cut comes even though wholesale rates rose again yesterday. They are now up from their lows but the sharpest rises came at the long end. For a one year tenor, the rise over the past week has only been +6 bps.

China Construction Bank does not offer retail term deposits in New Zealand. It has registered capital of $200 mln in New Zealand and locally the bank is chaired by John Shewan following Jenny Shipley's departure earlier in the year. As at June 2019 it had $667 mln in residential mortgages in New Zealand.

Here is the full snapshot of the advertised fixed-term rates on offer from the key retail banks with the new HSBC offers included.

Fixed, below 80% LVR	6 mths	1 yr	18 mth	2 yrs	3 yrs	4 yrs	5 yrs
as at September 11, 2019	%	%	%	%	%	%	%

ANZ	4.29	3.65	3.99	3.59	3.99	4.85	4.95
	4.29	3.65	3.75	3.59	3.89	4.19	4.29
	4.79	3.65	4.55	3.59	3.99	4.35	4.45
	4.79	3.55		3.59	3.99	3.99	3.99
	4.99	3.65	4.79	3.59	3.99	4.35	4.45

Co-operative Bank	3.69	3.69	3.75	3.75	3.99	4.19	4.29
China Construction Bank	4.70	3.19		3.19	3.19	4.95	4.95
ICBC	5.15	3.79	3.79	3.75	3.99	4.29	4.39
	4.65	3.35	3.35	3.35	3.35	3.35	3.35
	4.29	3.69	3.69	3.69	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

Source: interest.co.nz

Source:

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92 Comments

by SmoKey | 11th Sep 19, 8:14am 1568146444

After the Aussies, now the Chinese are set to conquer the banking in Aotearoa ?
Welcome, Welcome, the red carpet has been spread.

by HeavyG | 11th Sep 19, 8:19am 1568146787

Yes please, although a sub 3% conqueror would be nice.

by Smalltown | 11th Sep 19, 8:30am 1568147433

Well the Herald has been conquered. I count at least 3 Labour negative articles this morning but unless it was well hidden I couldn't find any mention of Bridges meeting with his masters, sorry I meant Chinese officials including the secret police and ol sus Jian Yang. Has his trip been mentioned at all?

by ShoreThing | 11th Sep 19, 9:51am 1568152268

RNZ covered that when they interviewed him on the radio this morning. No one goes to the Herald for actual news.

by RickStrauss | 11th Sep 19, 10:30am 1568154639

Watch out for Hosking's column over the next few days justifying Beijing Bridges. Wouldn't be surprised.

by RickStrauss | 12th Sep 19, 11:38am 1568245093

Ah, well, called it more or less...turns out it's Hosking's better half and more recent Hosking recruit talking up the fall of Ardern and the rise of Beijing Bridges, whilst Hosking v1.0 goes after Ardern. Perhaps hoping this will nicely help gloss over Beijing Bridges gushing over the CCP's head of secret police.

by mikekirk29 | 11th Sep 19, 1:58pm 1568167117

Interesting that Newshub had interview on line but NOT on news last night??

by tothepoint - d… | 11th Sep 19, 8:57am 1568149057

Marvellous news, especially for First Home Buyers & property investors - of whom there are many in Auckland.......

But let’s hope it doesn’t lift the lid on house prices by too much???

TTP

by HeavyG | 11th Sep 19, 9:09am 1568149775

TTP said "But let’s hope it doesn’t lift the lid on house prices by too much???"

Let the market decide (although that is becoming more and more difficult with all the rules and regulations now in place and being considered e.g. FBB, LVR restrictions, ring fencing).

by CJ099 | 11th Sep 19, 9:22am 1568150561

You forgot AML (Anti Money Laundering) rules, that's what is really helping to suppress house prices in the more expensive areas. Mortgages rates could drop to 0.5% for FTB's and it still wouldn't be enough to help the paper millionaires. Anyone still trying to sell their home over the million mark is going to be in for the long wait.

by Yvil | 11th Sep 19, 9:59am 1568152768

Paper millionaire? Are you referring to share certificates? Or maybe cash? Because houses are built on solid ground and made of timber, concrete, bricks and mortar (they can also be lived in, a fairly basic human need)

by mfd | 11th Sep 19, 9:58am 1568152736

All the business I have shares in own physical assets too, and many provide basic human needs (and some slightly more frivolous human needs). Some of them even build houses...

by CJ099 | 11th Sep 19, 10:17am 1568153845

@ Yavil: Paper millionaire is the commonly used term for those who think they're a millionaire but then start to realize that they just have an over valued house (Usually over the million mark) Since there is nothing to support that equity in the local economy, due to property value being pushed up by forces that are now gone (Foreign Buyers). Sorry are yo familiar with Auckland's property market?

by Yvil | 11th Sep 19, 11:52am 1568159561

CJ, using derogatory names or trying to diminish other's wealth only displays envy and pettiness. Why not learn and try to make yourself better off instead ?

by CJ099 | 11th Sep 19, 11:56am 1568159778

Yavil it's a general term that's been around for a while get use to it and grow up!

by Yvil | 11th Sep 19, 11:55am 1568159703

Also you envious comment about "paper millionaires" is utter rubbish, do you know where the 50 most wealthy people have their fortunes in? That's right, property (reference NBR Richlist)

by CJ099 | 11th Sep 19, 12:00pm 1568160030

I very much doubt that if it were true you would send us all the link with the evidence to prove it. Here's a link for you that states that "Each year about $1.35 billion from the proceeds of fraud and illegal drugs is laundered through everyday New Zealand businesses". NZ Justice website link: https://www.justice.govt.nz/justice-sector-policy/key-initiatives/aml-c…

by Yvil | 11th Sep 19, 12:07pm 1568160460

There you go

https://www.stuff.co.nz/business/110868248/heres-how-new-zealanders-get…

Will you now admit that you were wrong? I doubt it

by Yvil | 11th Sep 19, 12:10pm 1568160632

And there

https://thespinoff.co.nz/business/12-08-2019/ten-takeaways-from-the-nbr…

by Yvil | 11th Sep 19, 12:13pm 1568160833

Here is "paper billionaire" according to you CJ, Bob Jones

https://www.stuff.co.nz/business/114929454/property-portfolio-propels-s…

by CJ099 | 11th Sep 19, 12:25pm 1568161512

Go read my link that shows a lot of dodgy laundered money flowing through NZ, hopefully not as much as there use to be. Not all millionaires are legitimate or are you that naive. Remember a lot of property developers, REA's benefited from this dodgy money to get rich which is why they're now very worried with the Foreign Buyers Ban and restrictions on the global markets.

by Yvil | 11th Sep 19, 12:26pm 1568161608

I can't see you admitting you were wrong, all you're doing is changing the subject, which is where do rich kiwis hold most of their assets.

by CJ099 | 11th Sep 19, 12:32pm 1568161931

Nope you still haven't read the link have you. :)

by tothepoint - d… | 11th Sep 19, 4:56pm 1568177793

Advice to CJ099:

When you're in a hole, stop digging.

TTP

by RickStrauss | 12th Sep 19, 11:39am 1568245157

Is that TTP's illegal basement excavation digging going on in Kingsland right now, you reckon?

by frazz | 11th Sep 19, 10:27am 1568154430

How many people does your house employ Yvil or pay in tax each year?

by Yvil | 11th Sep 19, 11:59am 1568159986

What a strange, weird question, my house doesn't employ anyone, I live in it, does your house employ anyone?
I also own commercial properties, these properties don't employ anyone either, the businesses in these properties do though

by frazz | 11th Sep 19, 1:52pm 1568166734

Wierd..? And do you own a business?

by Yvil | 11th Sep 19, 2:30pm 1568169016

Not wierd, weird. Yes I own a business too (actually more than one), what else would you like to know from me? And why?

by Nzdan | 12th Sep 19, 6:57am 1568228268

Favourite food? Colour? Do you like Ford or Holden?

by CourtJester | 11th Sep 19, 4:00pm 1568174443

How much of that $1 million is the price of the land though? I'm sure it's not the timber, concrete, bricks and mortar and labour that make up the majority of the price.
And the land value exists pretty much only on paper. It can change significantly without the land itself changing at all.

by Dgm | 11th Sep 19, 8:38am 1568147916

Perfect timing, after bridges meeting with the Chinese...

by cjmain | 11th Sep 19, 9:13am 1568150024

Great work Tongzhi Bridges

by TraderX | 11th Sep 19, 9:25am 1568150734

Has anyone even dealt with these people, do you think it is even a serious option? The website is.. interesting. Don't really seem to offer transactional banking as such.

Anyway may push the wider market lower.

by MisterB | 11th Sep 19, 12:30pm 1568161836

That has to be one of the most budget websites I have seen.

I note their fees are $500 app fee another $600+ when you drawdown and, like HSBC, they only deal with loans $500k plus. This will be a limited market.

by Yvil | 11th Sep 19, 9:42am 1568151737

WOW 3.19% !!! Very appropriate photo

by CJ099 | 11th Sep 19, 9:50am 1568152207

Like I said we'll probably see mortgages rates of 2.99% by Christmas this year with the current race to the bottom. Kind of good news for FTB's, thought question is will the lower rates provide enough of a buffer for all those coming off Interest Only mortgages? Probably not, mortgage rates would have to drop even further to help balance out those with high mortgage amounts.

by Laminar | 11th Sep 19, 10:26am 1568154404

It would actually just about be exactly right. 5.7% is the interest only rate to match 3% P&I over 25 years.

by CJ099 | 11th Sep 19, 12:14pm 1568160851

Humm.. I agree with you though 5.7% seems very high even five years ago. I recall that, since it was around five years ago that I bought my last house. I recon most would have been on around 5.4 to 5.3% We were originally on 5.3% five years ago. So say some one had a 30 year mortgage of $500k on Interest Only of 5.3% = monthly payments of $2208. Then they had to switch after five years to a repayment mortgage (Capital and Interest) = monthly payments of $3045.
If the mortgage rate dropped to 3% that would alter the monthly payments to $2392. For some families that extra $184 could be a finance stretch too far. That's why I still think mortgage rates will drop a bit more.

by Laminar | 11th Sep 19, 12:19pm 1568161186

2014 moving in to 2015 was the spike upwards in rates, i guess it depends on when in 2014/15 probably both our rate estimates showed up during that period. I dont think interest only is driving RBNZ choices though, Orr appears to simply be determined to get ahead, and stay ahead, of the inflation curve. In a sense that does capture some of the IO to P&I impact anyway.

by realterms | 11th Sep 19, 10:43am 1568155431

Swaps are down so much that it does seem like ~3% should be on the cards. At the start of this year the 2 year swap was about 2% and 2-year specials were about 4%. Now the 2 year swap is about 1%...

by SmoKey | 11th Sep 19, 3:33pm 1568172829

Waiting for the day when the bank will pay me to take a mortgage...By June 2020 ?

by Nzdan | 12th Sep 19, 7:00am 1568228414

Just go interest only.

by Yvil | 11th Sep 19, 9:47am 1568152030

DC: "If your loan amount is, say, $500,000, a 3.19% will save you $1,500 per year compared with the 3.65% rate that most large banks are offering for one year"

The interest rate differential is 0.46% (3.65 - 3.19) so I think $500k x 0.46% is a saving of $2'300 (not $1'500)

by ShoreThing | 11th Sep 19, 9:54am 1568152456

That's not how compound interest works though Yvil. Monthly payments on a $500k mortgage over 30 years @ 3.65% are 2,287.30, and $2,159.60 @ 3.19%. Difference of $127.70 per month or $1,532.37 per year.

by Yvil | 11th Sep 19, 9:58am 1568152701

Stop being complicated, that's not what DC meant.

by Laminar | 11th Sep 19, 10:28am 1568154484

It is what he meant i think, but your point is more significant. Principal payments are already savings so his point wasnt very well figured through.

by Mrs The Point | 11th Sep 19, 10:30am 1568154648

You cannot be serious! J.M. 1981

by JLM | 11th Sep 19, 3:31pm 1568172673

Hey MTTP, bit ironic we are seeing 3.19% Weren't you arguing with someone on here a few months ago as to how it's not possible? Hows the fixed 3.85% going

by Mrs The Point | 11th Sep 19, 10:15pm 1568196951

Apart from not understanding what irony is, you have all the facts wrong.
I never said lower rates weren't possible in the future, just that 3.25% was not available at that time, which was true.
You seem to have missed the 0.5% OCR cut since then. You should probably try reading Interest.co regularly to keep up.
My mortgages are going fine thanks. Some rolling over in a couple of months will benefit from this new rate or better.
The interest is tax deductible so not really important.

by ShoreThing | 11th Sep 19, 11:45am 1568159157

Let's put it another way. With a 500k mortgage @ 3.65% over 30 years, you will pay $323,427.21 in interest. At 3.19%, you will pay $277,456.20. The difference is $45,971.01 over the term, or a saving of $1,532.37 annually. How is that not what DC meant?

by Yvil | 11th Sep 19, 12:03pm 1568160208

Only one man will know, DC, what did you mean in your original comment please?

by Pragmatist | 11th Sep 19, 1:02pm 1568163743

Well, given his figures match up with what ShoreThing posted, i'd say its pretty obvious he meant you'd save ~$1500 in payments on the mortgage a year. $1500 a year less flowing from your wallet to the bank.

by Laminar | 11th Sep 19, 2:09pm 1568167756

ShoreThing actually said two different things. The first is that $1,500 is the annual sum of the reduced monthly payments and the second is that it is annual interest saved on average across 30 years. Both figures are about $1,500 so there is no way to be sure lol.

by Pragmatist | 11th Sep 19, 2:51pm 1568170291

And both are exactly the same.. There are two components.. interest and principal.. prinicipal doesn't change, so the change is in the amount of interest paid, and with a table mortgage the total interest savings averaged out over the term must equal the change in annual payments x the term.....

ShoreThing just tried to present it two different ways in the hope one would pierce the high density shield...

by Yvil | 11th Sep 19, 2:54pm 1568170456

That's assuming that the borrower repays principal, many don't

by Pragmatist | 11th Sep 19, 3:03pm 1568171000

The vast majority do.

by realterms | 11th Sep 19, 3:27pm 1568172422

And if the buyer does want IO, can they get these rates?

by Laminar | 12th Sep 19, 1:51pm 1568253070

@Pragmatist the principal contribution does change when interest rates change. Which is why you dont see the $2,300 saving and instead only see about $1,500. As the rate drops the amortization curve flattens. ShoreThing has presented two different things, the independent variable (the change in annual payment) and the dependent variable (total interest cost over time).
You can visibly easily see the effect by comparing a 10% repayment curve (steep) to a 1% repayment curve (shallow) over 30 years.

by CJ099 | 11th Sep 19, 10:01am 1568152895

No you are incorrect Yvil, try working it out using an actual mortgage calculator where you need to take into account the mortgage loan period and whether it's a repayment mortgage. David's calculation is correct at a saving of $1,500 per year between the two mortgage rates.

by HeavyG | 11th Sep 19, 3:29pm 1568172584

DC is right only if the mortgage term is for 30 years. A mortgage for a 20 year term would only save a person $1,409 per year. DC should include the term upon which he is basing his calculation.

For a person like me who is interest only a change from 3.65% to 3.19% would save me $2,300 per year (actually my debt is $1m and I am currently fixed at 4.35% so I stand to save a bit more if rates are still 3.19% when I float in December (i.e. $11,600 a year!).

People are comparing apples with oranges. Yvil is correct of the mortgage was interest only. DC is right if the mortgage is for a 30 year term. Both a wrong if the mortgage is for a 20 year term.

by Nzdan | 11th Sep 19, 10:28am 1568154502

It's like Yvil's only purpose on here is to find any comments he/she can question/challenge/prove wrong in an attempt to look like a big smarty pants. More often it's dressing his/her alternative interpretation or opinion as more factual than the original statement which was never wrong to begin with.

by Mrs The Point | 11th Sep 19, 10:34am 1568154895

Sometimes I think he/she is serious with his/her comments.

by Yvil | 11th Sep 19, 12:22pm 1568161339

Of course I am serious with my comments, I just find it hard to ignore the incredible ignorant comments. Like when CJ says "by CJ099 | 11th Sep 19, 12:00pm I very much doubt that" (that most wealth in NZ is held in property)

by Yvil | 11th Sep 19, 12:24pm 1568161484

I suppose I keep thinking, because Interest is a business site, only people with experience and knowledge will post but any T, D & H can post his personal, opinion, no matter how little he/she understands about a subject

by CJ099 | 11th Sep 19, 12:29pm 1568161768

Yavil; Clearly you don't even understand basic math let alone business and global market forces. And as others have pointed out above you do like to troll people rather a lot.

by Laminar | 12th Sep 19, 1:43pm 1568252598

Accusations that someone doesnt understand basic maths should be added to Godwin's law.

by CJ099 | 11th Sep 19, 12:06pm 1568160360

That's why it's best to shame him with real facts and figures. :)

by youngdumbandbroke | 11th Sep 19, 12:16pm 1568160982

Isnt that the whole point of a forum ? so we can argue with strangers over the internet?

by Yvil | 11th Sep 19, 12:29pm 1568161783

Debating with people like you who have common sense and a bit of knowledge is great, arguing with an ignorant person with no knowledge about subject …not so much

by Good Samaritian | 11th Sep 19, 1:12pm 1568164357

Is there a chance we could meet?

We'll all having bets on this forum whether you're a:
1. National party troll, or
2. A horse with blinkers on.

My point is seem to ignore past governance, which over the last 3-4 decades have done no favours in NZ inc, and its time to correct the course.

by Yvil | 11th Sep 19, 1:44pm 1568166282

I have no problems meeting you, I have been the only one so far to go meet the team at Interest, I've got nothing to hide. It'll have to be before Monday as I'm flying to Europe then

by Yvil | 11th Sep 19, 2:21pm 1568168511

Good Samaritan, how about tomorrow 11am at Dizengoff in Ponsonby?

by Yvil | 11th Sep 19, 6:00pm 1568181607

Hello, Good Samaritan…?

by cmat | 11th Sep 19, 2:41pm 1568169668

Why doesn't interest.co.nz's table reflect CCB's 'special' 4 and 5 year rates?

3.30% and 3.45% respectively.
The 4 year is a market leading rate.

by realterms | 11th Sep 19, 11:17am 1568157422

BTW the table still renders badly for me (and others, based on previous comments). I suspect this a chrome thing, looks ok in safari.

by Pragmatist | 11th Sep 19, 11:29am 1568158169

Is it just me, or is the website performance generally pretty poor? On my two Android devices (phone and tablet) it can lock up and not do anything for 10-15secs, and sometimes comment sections take forever. On the laptop its not as bad, but sometimes 2-3 secs where you can't scroll the page

by Mrs The Point | 11th Sep 19, 12:02pm 1568160136

I'm not having these issues Win10

by gingerninja | 11th Sep 19, 7:20pm 1568186449

Apart from the fact that you are using Win10 ;-) LOLOLOL

by Mrs The Point | 11th Sep 19, 10:27pm 1568197632

I'm hurt Gingy. hahahaha
Nothing wrong with a PC.

by HeavyG | 11th Sep 19, 12:11pm 1568160714

Could be an ad blocker is affecting the table.

by realterms | 11th Sep 19, 12:59pm 1568163568

Aha. Thanks

by Averageman | 11th Sep 19, 10:55am 1568156142

I guess the printing press is producing stuff that h has to go somewhere. While their people cant export this money, their banking certainly looks like it can. Does anyone know how much market share the CCB has in little of NZ...?

by MisterB | 11th Sep 19, 12:24pm 1568161465

I bet CCB are VERY VERY Niche. Expect only to cashed up borrowers with 50%+ equity.

by realterms | 11th Sep 19, 3:28pm 1568172500

Yes. The question for me is how much the niche players will force the hand(s) of the big players.

by MisterB | 11th Sep 19, 7:56pm 1568188606

The big players have to fund with retail deposits, so that would require some pretty steep drops there. Interestingly, swaps are on a run up

According to RBNZ data, looks like CCB has 0.25% of market - $667m in housing loans, down 6% year June, so guess they are trying to stay viable. Would be interested if any commenters have had any experience with them

by realterms | 12th Sep 19, 8:26am 1568233616

Didn't I see that ASB just raised $600m at 1.89 for 5 years?

by MisterB | 12th Sep 19, 10:07pm 1568282848

$600m doesn't fund many loans. About 1% of their home loan portfolio, or, ALL of CCB's. The fact is, the big 4, and TSB + Kiwi have a legislative responsibility to use retail deposits, which CCB and HSBC do not have.

by dictator | 11th Sep 19, 11:40am 1568158838

Still anticipating 2.99% for my refinancing next year.

by Voiceofreason | 11th Sep 19, 1:49pm 1568166550

As long as we don’t create ghost cities, or rather ghost developments in NZ, like they’ve created with the China property bubble, and like in Ireland before the crash. Search YouTube for some video tours of those ghost cities. It’s a real thing.

by gingerninja | 11th Sep 19, 7:22pm 1568186546

If anyone has ever managed to get a mortgage with these guys can you fess up?

by Mrs The Point | 12th Sep 19, 7:43am 1568231030

I have friends who have 2 mortgages with them. Haven't heard any negative comments. You may need to speak Mandarin though.