Finally, the last of the major home loan lenders has adopted what their rivals did last week - a 3.49% two year mortgage 'special'. That is a -5 bps reduction.
At the same time, ANZ cut most term deposit rates from 5 months to 5 years, and mostly by -10 bps.
It has been a week since BNZ clipped its two year fixed mortgage rate 'special' down to 3.49% and most of their main rivals have followed them down.
BNZ did this without moving their Standard two year rate, which is a pretty unique event - usually these standard rates dip in lockstep.
First to match them was Westpac, also adopting the 3.49% two year fixed rate without moving their standard rate.
TSB then moved their fixed rates down, all rates six months to two years, both 'specials' and 'standards' but their two year was only taken down to 3.59%.
Then ASB moved down, pricing their carded two year 'special' at 3.49% and cutting their two year 'standard' to 3.99' which now is the lowest two year 'standard' rate by any main bank.
And now Kiwibank says it will adopt 3.49% as their two year 'special' on Monday, September 30. Their two year 'standard' is being reduced too, but only to 4.24%.
Along the way, SBS also reduced rates for three fixed terms including two years and their 'special' is set at 3.59%.
This means that ANZ now has the highest two year 'special' of the five main banks at 3.54% so you might expect them to adjust down to the new benchmarks fairly soon.
So far, none of the main banks have shown any inclination to tread where some of the Chinese banks have gone, with the Bank of China offering 3.15% for two years fixed, China Construction Bank offering 3.19% and HSBC Premier offering 3.35%.
Before the August 7 RBNZ OCR rate cut, this two year rate was sitting at 3.79%. Since that official -50 bps cut, the two year fixed mortgage rate has been reduced by -30 bps and term deposit savers have been spared about 25 bps. (That is, the one year TD rate has fallen from 3.05% to about 2.80% and therefore only suffering half the OCR reduction.)
Wholesale swap rates have started dipping again after a brief firming flurry. But they are not yet back down to the levels we saw in early September.
Term deposit rates have inched lower at a few banks, but not at any of the majors in the past week. We understand one of them may cut some rates early next week however. These deposit rates have an out-sized bearing on how low the main banks can pitch their home loan rates, more so than wholesale rates.
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 28, 2019 | % | % | % | % | % | % | % |
| ANZ | 4.29 | 3.65 | 3.99 | 3.49
 |
3.99 | 4.85 | 4.95 |
 |
4.29 | 3.65 | 3.75 | 3.49
|
3.89 | 4.19 | 4.29 |
 |
4.79 | 3.65 | 4.55 | 3.49
|
3.99 | 4.35 | 4.45 |
 |
4.79 | 3.55 | 3.49
|
3.99 | 3.99 | 3.99 | |
 |
4.99 | 3.65 | 4.79 | 3.49
|
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 | 3.65
|
3.69 | 3.59
|
3.99 | 4.49 | 4.49 |
 |
4.35
|
3.69
|
3.69
|
3.59
|
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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34 Comments
Is 3.49% the bottom? Probably not.
But is it worth waiting?
How much lower are they going to go in the near future? RBNZ hasn't too much further to cut OCR without approaching negative territory (a serious mindset involved with significant implications) and banks are still going to have to attract money; so possibly 0.5% or an outsider 1.00%. How much difference is that going to make to repayments over two years?
What is the outlook for two years time when one will be renewing - current RBNZ comment is that interest rates are going to be lower for longer so reasonably likely to still be low in two years.
Personally, if I was a borrower and renewing I would be seriously tempted for two years.
Worth breaking for these rates? Depends on one's current term and bank break fees.
As an aside re RBNZ - if things aren't looking too hot in terms of the economy and housing was stagnant (nationally, for economic stability reasons, they would be wanting to see some net growth around 1 or 2 %), I would see RBNZ probably visiting LVRs to stimulate housing rather than a further OCR cut.
"Is 3.49% the bottom?"
It's a tingling in the legs thing, isn't it?! That feeling that "this is it". (NB: I reckon there are a few bank treasurers nervously thinking the same thing! "We've overshot. Quick. Get a 4 back as the Big Figure")
Given the current state of affairs, you could be right, but it's a matter of "where will the next state of affairs leads us?"
No one thought Germany would have negative interest rates - no one, not even the 'gloomiest' of guessers, and yet here we are....
3.49% is as good a rate as any to lock in at, but don't be surprised if we look back at the end of that time and think "Golly! Who would have thought...."
Correct, because immediately prior to the OCR drop, 25bps of drop was already expected and priced in .. so it's purely the additional 25 that took markets by surprise and that has been passed on, for home lending at least. It has not been passed on so much for deposits, which have only really dropped 15 since then
"3.49% and their new two year fixed mortgage rate, the question is, will they jump lower again?" Answer; Yes, they will go lower. I still think we're likely to see rates drop to 2.99% before the end of this year.
To put it simply there's not much Foreign Buyer pressure to maintain high house prices. And since the banks are extending their fix rate time periods that's a strong indicator they they'll go lower.
Hi CJ1099
While not agreeing with your 2.99% figure by the end of the year, it is really pleasing to see you substantiate your view.
Sadly, too many posts on this site are made without substantiating the reason for them. A substantiated view is far more valuable as the reader is able to assess whether or not there is a reasonable basis for that view.
There seems to be two market offerings on fixed rate deals - one by banks mainly funded by deposits and the other mainly funded through fixed income.
If the later group decide to cut their margins they can already do 2.99% as two and three year NZ govt are below 1% and with their 40bp credit premium there is still margin.
My view is this time next year we will see lower rates by a margin from where we are now as we see OCR and swaps drop with the slowing economy. How much lower is pure guesswork but 50bps from where we are now seems plausible.
@ Printer8: Shame all you could do is waffle and not even provide your point of view as to why you think mortgage rates couldn't drop to 2.99%?
Are you even aware that the current lowest mortgage rate on offer in NZ is 3.19% with the China Construction Bank. So are you predicting that rates are about to increase and if so why? I can give you plenty of further reason why they're going to sink lower.
- For the last 4 years, when bank economists, Roger Kerr and all said inflation is around the corner and interest rates were about to rise, I stated against the trend that rates will go down (an obvious view today). I backed my view by fixing my mortgages for 1 year since 2015 and reaped the benefit of lower rates
- I called an OCR drop of 0.5% when no one saw it coming
- Shortly after the OCR cut of 0.5% when many were lamenting that the banks were not passing on much of the cut I forecast rates of 3.49% for 2 years by the end of September
I don't always agree with what you have to say, but praise where due you called this one. I probably haven't been on this site for as long as you have so not sure what your long term track record is like, but kudos anyway.
https://www.interest.co.nz/personal-finance/101778/after-being-matched-…
Glitzy, since it's so easy and even "a chimp can do" it as you say, why don't you make 3 economic predictions that go against common belief, one short term (days) one mid term (weeks or a few months) and one long term (a few years). Make sure you are specific with numbers and dates.
We'll see if you can hit the trifecta
I guess that's a no... Does the ball go cloudy before these extraordinary predictions are revealed and do you have to sacrifice anything before a session ?
I did a quick google of areas in Auckland with missing cats but I breathed a sigh of relief when it came up empty...
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