Hobbled by the pandemic and rising rates, banks respond to the Spring real estate selling season with restrained rises rather than outright rate cuts

Another main bank has raised home loan rates, this time Kiwibank.

This comes after longer term rates were raised last week by both ASB and Westpac.

Kiwibank however have raised all rates from 1 year to five years.

Their one year rate goes up to 2.65%, a +16 bps rise and taking this rate to the highest of any of the main banks, and the highest of any bank for this term.

Their two year rate however was raised only +10 bps to 2.89% and this is the lowest of any of the main banks.

They added +20 bps to their three year rate, taking it to 3.49%, matching Westpac, but now well above BNZ and ANZ at 3.25%.

They added +30 bps to both their four and five year fixed rates.

At this point, we don't have any notice their term deposit rates are rising un unison.

As you can see from the swap rate chart below, the trend of rising wholesale money costs is rising and banks will be under some pressure to raise rates from here.

And in turn, that is because there is growing conviction among banks that the RBNZ will soon raise its OCR, despite the ongoing lockdowns. The RBNZ is on a mission to 'normalise' and a short, pesky lockdown doesn't seem to be changing consumer expectations or buying habits in any permanent way. And inflation expectations are drifting well away from the 'transitory' hue some policy makers were assuming. So the RBNZ is increasingly on its guard against embedded inflation (the primary mandate focus) and will no doubt feel more comfortable about moving rates up while at the same time our labour market appears to be holding its healthy shape (the other mandate focus).

Despite lockdowns, the Spring real estate selling season is now underway in a somewhat confused environment this year. Competition for this expected rise in business for banks may just be by a smaller rate rise, rather than cuts. Although HSBC did bravely cut a key rate last week and giving them a rate card that is noticeably lower than the main banks.

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). (Our mortgage calculators are temporarily down, but will be back soon. Our term deposit calculator is back up and running.)

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 September 13, 2021	%	%	%	%	%	%	%
ANZ	3.39	2.55	2.79	2.95	3.25	4.29	4.59
	3.29	2.55	2.79	2.95	3.55	3.99	4.29
	3.29	2.55	2.79	2.95	3.25	3.69	3.99
	3.55	2.65 +0.16		2.89 +0.10	3.49 +0.20	3.89 +0.30	4.19 +0.30
	3.29	2.55	2.85	2.95	3.49	3.99	4.29
Bank of China	3.45	2.39	2.59	2.79	2.99	3.39	3.69
China Construction Bank	2.65	2.65	2.65	2.85	3.25	3.55	3.99
Co-operative Bank (*FHB only)	2.55	2.35*	2.79	2.95	3.39	3.69	3.99
Heartland Bank		2.15		2.45	2.65
HSBC	2.89	2.40	2.65	2.79	2.99	3.39	3.69
ICBC	2.85	2.35	2.65	2.75	3.05	3.45	3.75
(*FHB only)	2.79	1.99*	2.69	2.89	3.09	3.49	3.79
[incl Price Match Promise]	2.89	2.55	2.74	2.89	3.15	3.49	3.79