Lower and lower, that is the continuing track for fixed mortgage rates.
The New Zealand subsidiary of the Bank of China has launched a 3.15% rate for one and two year fixed home loan contracts, setting a new low in the New Zealand mortgage market.
That is a -35 bps and -40 bps cut respectively.
(Rates under 3% seem to be now a market possibility?)
It has also cut its 'special' floating rate to 4.89% by -20 bps. This is the only floating rate below 5% from any bank.
These new rates beat the China Construction Bank 3.19% rates and are substantially lower than rates offered by the main retail banks in New Zealand.
In fact, they have a -50 bps advantage over these main bank for the popular one and two year fixed terms.
China's banks have 'arrived' in the local retail home loan market and the impact will likely be long-term. We will soon release a profile explainer of these banks' presence here
Wholesale swap rates fell in the latest trading session, ending a recent rising turn.
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 September 18, 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 | 3.54 | 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 |
| Bank of China | 3.99 | 3.15
 |
3.70 | 3.15
|
3.79 | 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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64 Comments
Literally all it says on the English language part of the website on the home loan page is: "Home Loans are secured by mortgage over residential properties. A home loan can be provided for purchasing an owner occupied property; or for purchasing an investment property; or for refinancing an existing home loan; or for any other purposes approved by the Bank."
The last interest rate press release page says:
Conditions that apply to all special interest rates: BOCNZ fixed home loan special interest rates require a minimum of 20% equity in the security property provided to BOCNZ. These special rates are also subject to the general conditions listed below.
General conditions that apply to all interest rates: Interest rates are subject to change or withdrawal at any time without prior notice. BOCNZ's lending criteria, terms, conditions and fees apply. An early repayment adjustment may apply if you break an existing fixed interest rate period."
'A' customer may be spot on. A reasonably small loan book that has grown at half the market rate in the last year.
https://bankdashboard.rbnz.govt.nz/orgs/BOC
Wonder how strict their credit policies are? These outfits (BOC, CCB, HSBC) tend to cherry pick the deals they want and are not mass market. All it does is make noise on forums like this. DC often forgets to point out that HSBC and CCB dont even lend under $500k
The lower Term Deposit rates go, the 'happier' we all should be!
Yes, the income return will be lower than we have been used to, but in all likelihood, the purchasing power of the principal invested will be more when the deposit matures. It will take time, and probably several roll-overs of short term deposits, but sooner rather than later, as a deflationary wave sweeps the globe, today's saved money will buy more of tomorrows goods and services. ie: the prices of all things will fall....cash (interest rates), property, art, shares...you name it...they're all in the same basket. The only 'casualty' will be debt holders, and that is what 'they' are fighting so hard to avoid.
As TD holders start eating their principal I don't know how happy they'll be. Their happy dream was to live off the interest and leave a nest egg for the kids, that ain't gonna happen now.
Also the assets you list are not in the CPI basket, property, art, shares... as cash gets cheaper as RBNZ seeks to stimulate CPI the price of non-consumables increases e.g. see gold and silver https://www.interest.co.nz/saving/gold-spot.
I don't plan on being the richest corpse in the cemetery! I plan on spending the last cents of my money on the nails for the coffin (tricky, timing, I'll admit!), and as for 'the kids'? They'll be fine if we've done a decent job of educating and providing for them whilst we are here - just as we have been. I won't get anything from my forebears, and neither should my offspring rely on anything from us, either - I've told them so! ( and, yes, we are still on speaking terms!)
Savings are for spending at various times of our lives. That's' what they are - retained income, and drawdown of the principal should be part of any plan.
Oh, and that CPI you note - that's going to fall as well, as wages decline ( they will in nominal terms, but not in real) and the cost of production/sales translates into lower consumer prices. That, and as people, in general, pull back from spending, make prices fall on their own.
If ( when?) your current Employment Contract expires, and your employer says to you " Look, HG, things are tough. I'd love to keep you on, but I can't afford to pay you the current rate. I can afford your current pay rate less 25%, or I 'll have to let you go. Sorry about that" what are you going to do? Move? Where to and for how much, to compete with others in your situation.
Sure, maybe that won't be 'you' but it will be many others, and that is what will start the fall in nominal wages. That's what a deflationary environment creates...and...it's coming. Surely you can feel it? No? Well here's an old African expression, "By the time you can smell the lion, it's too late"
Your overall point, which is that wages will decrease, may well be correct.
You are wrong that it can happen so quickly and easily, though. Most employment contracts right now are not fixed-term and therefore do not expire. To reduce someone's pay, you would need them to consent, and if they don't, you will need to through a formal restructuring process to either reduce their pay or get rid of them. Doing that process correctly will take several months. (Starting the process with "Either take a pay cut or you're fired" will mean you have not done it correctly.) If you try to take shortcuts, you will get taken to the Employment Relations Authority, where everything you tried to do will get reversed, and the employee will get additional compensation on top of that.
" If you try to take shortcuts, you will get taken to the Employment Relations Authority, where everything you tried to do will get reversed, and the employee will get additional compensation on top of that."
Followed by the compnay becoming insolvent and the employee being rout of work anyway. (If things get to that stage)
Good chance of that, yes. Of course, the employee will be happy to squeeze a few more months of wages and more time to line up another job.
The employer probably won't be as happy. The lesson being that, if you think they are going to need to downsize, get started on that now, not when you're on the brink of collapse.
Interesting fairy tale. Wages did not fall during the GFC and in light of how cheap money is now there is no indication they will drop anytime in the future. Given the low rate of unemployment and cheap money sloshing around (with more to come) I doubt many employers are laying off staff or threatening pay cuts as you suggest.
Do you have any data to support your... "prediction".
Well yes unlike your forebears who left the ladder down you have pulled it up and speak like a typical boomer - all for me - me - me. Bugger off and pay for your student loan and house. All you Boomers ned to get out there and spend spend spend! Save our economy and the World.
Ummmm.... many of us, me in this case, are paying at both ends. For our aging parents and our children's expenses. But that's an aside...
What I am arguing for is what you are frustrated about - the costs lumped on to our children and the biggest cost? Shelter. The sooner that distortion is corrected, the better they will be.
Yes lbut unlike you we paid off our Student Loans and are now supporting our aging parents (including home) but still cannot afford a house for ourselves. Children..put off and now too late..so excuse my bitterness towards your post but many in my generation in the same boat.
I never had a student loan, true. I didn't know what I wanted to do after secondary school (failed final year!) so I went to work in an electroplating factory; placing brass toilet roll holders into a vat of boiling acid! Followed by a stint at British Tube Mills, stacking tent poles and then a bank. So I know about 'making the best of life'. And that's what it is for all of us - it wasn't meant to be easy, and it's what we all make of what we are and where we are, and the circumstance we exist in.
To blame 'boomers' and student loans etc is quite frankly a cop-out. I worked with what I have and what is available, and try to change what I can, so do you, that's just the way it is.
What's free, though? It would have to be funded via an increase in income tax. The way the student loan system works, it basically already is that. It's an income tax that mostly applies to people who actually got their education, with a little help from the rest of the tax base, who pay the interest component.
The money has to come from somewhere.
The current system is that you pay 12% of your income over $19,000 until the costs of your studies are covered (except the interest component, which is covered by other people's income tax).
The alternative system is that everyone (including people who didn't study) pay some smaller percentage of their income, forever, as part of income tax.
To be clear, I don't really support either system over the other - I just think we should be clear about the advantages and disadvantages of each.
Both systems encourage you to pursue an education. The other system might encourage it more, but there is something to be said for going too far, too. Higher education isn't for everyone. To some extent it is better for people to be forced to think at least a little bit about whether what they're studying will actually improve their ability to make money later.
In terms of encouraging retention of educated people, the current system is far superior. If you move out of New Zealand before paying off your student loan, that means you have to start paying interest on it. That encourages you to stay, to avoid having to pay interest. With the other system, you get everyone else in New Zealand funding your education for you, and then you can leave without consequence. Unless you had something else in mind for that?
I don't think it "encourages" that. Never being able to come home again is a pretty steep price that I think merits serious consideration. I personally don't see that as worth saving like $5,000 a year for 6 years, but I guess not everyone agrees. Don't think I've seen any statistics on that, though.
You may be right there BW..... read something yesterday which was explaining that the very rich have stopped buying. Sales of luxury homes are significantly down, one of the main auction houses was down 10% and another down around 25%. ( referring to Sotherbys and Christies From memory).
It was earlier in the year when the Aussie banks realised they were in trouble due to a huge amount of mortgage lenders coming off their Interest Only rates and having to move on the Capital and Interest (Repayment mortgages), that could have resulted in massive amounts of people not being able to repay their mortgages. Even worse with a declining property market. But thankfully the banks here have acted quickly to lower their rates and easy that burden for Investors and home owners. I think the Bank of China is throwing it's hat in to the ring to attract more business on residential mortgages since the construction industry is faltering (Again due to high house prices). Just good business sense really.
From the same area.
"One who oppresses the poor to increase his wealth and one who gives gifts to the rich—both come to poverty."
Maybe Karma will visit finally on some of our recent knights, dames and governments who definitely did the former....
By the way who has heard the rumour that Brawnlee is to be knighted (when he finally stops wasting every ones tax payer dollars and retires) for his efforts in the rebuild?
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