Following a very direct and clear signal that the RBNZ has turned hawkish and is preparing to hike the OCR sometime later this year, banks have announced fixed home loan rate increases.
First to move, and before the RBNZ signal, was ASB.
The RBNZ is encouraging the move. Its meeting notes states "The Committee agreed that any future increases in mortgage rates will further dampen house price growth."
Soaring inflation figures released on Friday have made an August RBNZ rate hike seemingly inevitable.
These latest mortgage moves follow market reactions that drove the wholesale interest rates sharply higher, and the NZD temporarily higher as well.
Daily swap rates
Select chart tabs
First, Westpac signaled its rate rise last night, then BNZ raised rates and now ANZ has joined in with its own hikes of fixed home loan rates.
ANZ however has not raised their rates quite as much as ASB or BNZ, leaving their rate card under these key rivals.
The ANZ one year rate is up +31 bps to 2.50%. Their eighteen month rate is up +39 bps to 2.74%.
The new ANZ two year rate is 2.90% and a +31 bps rise, while their 3 year rate is now 3.24% and a +25 bps rise.
ANZ is New Zealand's largest home loan lender, and it has never really had much to offer borrowers in the four and five year region. They made no change to these longer rates, but that did take the difference to a slightly lower level when compared to ASB.
Westpac has also taken some lower rate settings than ASB at the long end.
Of course, as with any bank, you can probably negotiate better rates (lower than these carded rate levels), depending on the strength of your own financial position.
Kiwibank has yet to announce their changes. We would expect these sometime early next week if they don't come today. So the window of opportunity to grab bottom-of-the-cycle rates is very short now.
Most of these banks have also raised some term deposit rates at the same time.
Now that we are in a mid-Winter real estate season and sales volumes are falling away somewhat, now is a good time for bank pricing managers to push through rate increases. Even if they overdo it, it will allow them to offer 'specials' and 'discounts' when the Spring real estate season kicks off - in only about eight weeks from now.
One useful way to make sense of these changed home loan rates is to use our full-function mortgage calculators. (Term deposit rates can be assessed using this calculator).
And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options. Break fees should be minimal in a rising market.
Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at the moment.
| Fixed, below 80% LVR | 6 mths | 1 yr | 18 mth | 2 yrs | 3 yrs | 4 yrs | 5 yrs |
| as at July 16, 2021 | % | % | % | % | % | % | % |
| ANZ | 3.39 | 2.50
 +0.31 |
2.74
+0.39 |
2.90
+0.31 |
3.24
+0.25 |
3.99 | 4.39 |
 |
3.29 | 2.55 | 2.79 | 2.95 | 3.29 | 3.69 | 3.99 |
 |
3.29
+0.30 |
2.55
+0.36 |
2.79
+0.44 |
2.95
+0.40 |
3.25
+0.26 |
3.69
+0.30 |
3.99
+0.30 |
 |
3.55 | 2.19 | 2.55 | 2.99 | 3.39 | 3.69 | |
 |
3.29
+0.30 |
2.55
+0.36 |
2.75
+0.30 |
2.89
+0.30 |
3.29
+0.30 |
3.49
+0.10 |
3.79
+0.10 |
| Bank of China | 3.45 | 2.15 | 2.15 | 2.55 | 2.75 | 3.05 | 3.35 |
| China Construction Bank | 4.70 | 2.65 | 2.65 | 2.65 | 2.80 | 2.89 | 2.99 |
| Co-operative Bank (*FHB only) | 2.19 | 1.99* | 2.39 | 2.59 | 2.99 | 3.39 | 3.69 |
| Heartland Bank | 1.85 | 2.35 | 2.45 | ||||
| HSBC | 2.79 | 2.09 | 2.19 | 2.49 | 2.79 | 3.19 | 3.49 |
| ICBC | 2.89 | 2.15 | 2.15 | 2.35 | 2.75 | 2.99 | 3.19 |
 |
2.79 | 2.19 | 2.39 | 2.49 | 2.79 | 3.09 | 3.39 |
[incl Price Match Promise]  |
2.89 | 2.19 | 2.35 | 2.55 | 2.99 | 3.39 | 3.69 |
Fixed mortgage rates
Select chart tabs
Daily swap rates
Select chart tabs
93 Comments
Good. All these macroprudential tools trying to cool the ridiculously overpriced housing market were just tinkering around the edges. Everyone knows that the MAIN reason house prices are stupidly high is because interest rates dropped off a cliff. If kiwis can borrow more for housing then you bet your bottom dollar they will. Higher interest rates is a big part of the solution.
That's why I believe they need to raise the OCR now. We can not afford to just wait on US fed and leave it last minute. Our economy is very different from US economy. Our housing price has increased 30% within one year, which makes New Zealand becomes the country had biggest housing price increase in the world. If we act now, we still can gradually increase it so it won't crash the housing market. Lets face it, a 25 basis points increase will do nothing to the housing market but might be able to cool it down a bit which is what we need at the moment. It also can send the message out to warn people that low interest rate era is close to end, we need to speed wisely and start paying off our debts.
When affordability is pushed to the limits then lowered cost of borrowing, all things being equal, will push prices up.
Price to income ratios weren't great in 2006, but at least they weren't absurd. And as others mentioned, at least wages were increasing at a good clip
Nothing good in it, as they have only given a warning which we are hearing from last 6 months, interest rates are still not increased and I don't think so it will raised to the level where it disrupt the market.
Keep hoping nothing will change, there is still room for increase in house prices.
As I made it clear yesterday to counter some wishful thinking by a few housing specuvestors, I highlighted that ASB was simply the first one to acknowledge reality, and that the other banks would have followed in short order.
I don't claim to be a financial Nostradamus, as absolutely anybody without real estate blinkers on could have clearly seen the writing on the wall. And this is just the start, folks. An OCR raise next month looks quite likely too. Good first moves to re-balance the economy and heal from the current dangerous and ridiculously reckless ultra-loose monetary policy.
Yup rates will rise, but looking more medium long term i still think we are at a period similar to 2008 where rates were rising and eventually the whole thing crashes as there is too much debt and how does the world deal with that...? We take rates lower. This time to absolute rock bottom. OCR at -1% and massive massive QE everywhere.
It doesn't simply work like that way. In order to bring a high OCR to be negative again, we will need to go through another economy recession. Based on the current situation, that won't simply happen after another market crash. At the moment, I believe we either need to deal with inflation or stagflation.
Why? Slightly more than 50% of adults don't own realestate, a large number of adults couldn't own less. Amongst those that do a majority are living in the one house they own and can see the gains are only paper but those gains are having far reaching negative effects on society in general.
No surprise really.
There's simpler ways to tackle your issue of home ownership. Restrict # of house purchases per citizen. Easy as. But of course, no one will want to make those types of bold moves.
Singapore has proven with a sound government that every citizen can own their own home and still have appreciating assets. Don't need one or the other. But of course no one wants to do the hard work.
So what you're saying is that we should save the people who bought 12-18 months ago, but destroy the hopes of all the others who haven't bought yet? Many have said here before that the virtual price of your house is meaningless if you're not planning on selling. Why would those FHB's want to sell?
And even if this meant screwing 0.1% of the population, how does that compare to the 10-20-30% or more who have lost all hope?
They leave not because they can't own a home. They leave because NZ is seen as a small market and earning potential is limited. If you look over to the Oz, their earning potential is significantly higher for the same skilled work. That's because they of course have scale in terms of population and supply/demand, but still a reason why people go.
This Govt. is too timid to take any strong action to stop this madness. There are many Properties which got sold double the price comparing to 2019 but govt. is not able to see that. It is morally corrupt govt. with people full of self praise like our beloved Queen. SHAME
Someone who is looking for first home should move to Oz great potential/salaries, better life & affordable homes in many good cities.
So now the banks have got hold of people by their neck, first by giving lots of money to them at cheap rate and now they are squeezing it slowly but they will not kill you. They will sequeeze people like we juice a fruit.. I am not sure if i am guessing it right but people take a debt for 30 years but they only see the debt installments on yearly basis at the yearly rate. Do they think it will be low like that for next 30 years? Do they think how much interest they are paying to the bank every year and how much of it is the principal?
Like I said in 2019.
by Nzdan | 14th Nov 19, 7:05am
Banks probably want interest rates to rise after a prolonged period of increasing loan book size. A bait and switch of sorts. Get everyone juiced up on low lending rates and then tighten up the vice on the balls.
Aug OCR lift is a done deal - inflation has exceeded all expectations - most were expecting a .8-.9% lift in inflation for the qtr - making the FY number 2.8-3.0% - number has come in at 1.5% for the quarter resulting in a full year inflation of 3.3% - above the RBNZ's band of 1-3%.
Sure it is...
"The Committee reiterated that there will be near-term spikes in headline CPI inflation in the June and September quarters. These reflect factors that are either one-off in nature, such as high oil prices, or expected to be temporary in duration, such as supply shortfalls and higher transport costs."
" The Committee noted that medium-term inflation and employment would likely remain below its Remit objectives in the absence of some ongoing monetary support. However, the Committee agreed that the level of monetary stimulus could now be reduced to minimise the risk of not meeting its mandate."
I wouldn't want to be holding a hard asset with a mortgage over it where interest rates are on the move. A rental with a $500k mortgage at interest only would currently cost $12k in interest. If rates increase 1% then that's $100 per week. I can't see tenants being squeezed for that somehow, otherwise why isn't the landlord already charging it?
There are over 3000 FHB taking out mortgages according to RBNZ C31 every month, and a similar number of investors. Assume half the investors are buying from other investors, then only 1500 per month added to rental stock (that's just the ones with mortgages). Similarly assume half of the FHB are couples leaving their own rental (with no flatmates, anecdotally I know heaps of people like this), freeing up another 1500 properties. (1500x2) x 12 = 36k additional rental properties available in 12 months.
25 years ago NZ births were 57k per year. That's 15k rentals needed at 4:1 occupancy. 36k - 15k = 21k surplus.
Broke my 2.35 1 year fixed term with Kiwibank today (ending Feb 2022) and re-fixed at 2.55% for 2 years. If it pays off we've avoided getting a 2 year fixed term in February at something over 2.9%. If it doesn't and the OCR stays at 0.25 until next year not such a big loss. The great thing about breaking a fixed term in favour of a higher rate is that the break fees are 0.
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.