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
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92 Comments
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?
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.
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).
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.
@ 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?
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…
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
Here is "paper billionaire" according to you CJ, Bob Jones
https://www.stuff.co.nz/business/114929454/property-portfolio-propels-s…
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.
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.
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.
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.
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.
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)
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.
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.
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...
@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.
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.
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.
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.
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.
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
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
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