Kiwibank is the last of the main banks to raise its fixed home loan rates in the current round of increases.
But it is doing so with a cash incentive of up to $3000 to ease the pain.
However, they are not the only bank to offer non-rate incentives. ANZ is offering $3000 to first home buyers, plus it has a prize draw of winning up to $100,000 off your home loan.
And TSB is offering to beat any offer from an Aussie-owned bank by 0.05%.
With these Kiwibank rate changes, we can now assess where the main banks have settled. The hotly contested one year rate is lowest at Westpac at 3.19% among the main banks, although you can still get 2.35% at Heartland Bank. in fact all challenger banks are still offering one year fixed rates below 3%.
For 18 months fixed, the lowest rate among the main banks is also at Westpac at 3.49%. At the challenger banks 2.65% is the lowest at ICBC.
For the other hotly contested term of two year fixed, Kiwibank's 3.59% is the clear leader among the main banks. Heartland's 2.60% has a major rate benefit, however, among the challenger banks.
For three years fixed, it is ANZ's 3.94% that is the lowest of the main banks. But Heartland reigns supreme here too for the challenger banks at 2.90%, as the only bank to still offer a three year rate below 3%.
These rates may move a little from here for competitive reasons, and some challenger banks have yet to shift up. But bank treasurers will be watching the wholesale money markets before making any more cost-induced rate changes. We could settle in at these general levels for a while, for as long as wholesale money markets don't make any significant moves.
One useful way to make sense of these changed home loan rates is to use our full-function mortgage calculator which is also below. (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. But 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 October 26, 2021 | % | % | % | % | % | % | % |
| ANZ | 4.00 | 3.24 | 3.54 | 3.70 | 3.94 | 5.04 | 5.34 |
 |
3.85 | 3.25 | 3.59 | 3.75 | 3.99 | 4.35 | 4.65 |
 |
3.89 | 3.24 | 3.54 | 3.79 | 3.99 | 4.49 | 4.49 |
 |
3.99 +0.44 |
3.29 +0.34 |
3.59 +0.29 |
3.99 +0.34 |
4.29 +0.40 |
4.49 +0.30 |
|
 |
3.69 | 3.19 | 3.49 | 3.79 | 3.99 | 4.29 | 4.49 |
| Bank of China | 3.45 | 2.69 | 2.89 | 3.09 | 3.39 | 3.65 | 3.95 |
| China Construction Bank | 3.25 | 3.25 | 3.59 | 3.79 | 3.99 | 4.29 | 4.39 |
| Co-operative Bank (*FHB only) | 2.99 | 2.79* | 3.29 | 3.60 | 3.89 | 4.14 | 4.29 |
| Heartland Bank | 2.35 | 2.60 | 2.90 | ||||
| HSBC | 2.89 | 2.69 | 2.89 | 3.09 | 3.29 | 3.59 | 3.84 |
| ICBC | 2.85 | 2.45 | 2.65 | 2.85 | 3.15 | 3.65 | 3.95 |
 |
2.89 | 2.75 | 2.99 | 3.15 | 3.45 | 3.95 | 3.95 |
 |
2.89 | 2.94 | 3.20 | 3.40 | 3.64 | 3.94 | 3.94 |
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29 Comments
On what grounds would they become illegal? There are costs associated with a new loan, moving a loan or moving house, so I guess these incentives come to play. ASB also advertises a First Home Buyer cash offer.
Pretty sure every bank offers at least some and they have been around for years, but not always advertised. Kiwibank have always offered too, they are just deciding to advertise it now (and only for a 3 week period it seems). They have super strict rules on their 4 year clawback contract though according to their offer page ... if you even stop your income being credited to your Kiwibank account, they can take the cash back. Ouch. I guess you could choose not to take the cash?
Neither would be considered taxable income - as its not a regular payment received - which is what income is defined as
The first would be considered a "discount" or "sign on bonus". No different to discounts on an electricity bill, or on buying a new car. Its effectively a cash rebate related to a purchase. You are not taxed on discounts on purchases of goods or services
The second would come under the windfall rules- windfalls are not taxed. ie lotto or other prizes like win a car if you buy a certain product.
In that case things must be different here to elsewhere.
I seem to recall (back in the Dark Ages) that we granted Loan Forgiveness to staff as a way of paying a 'tax-free' bonus, and that sort of thing eventually led to Fringe Benefits Tax. It was viewed as Income-like. It went along with things like pre-tax contributions to Pension Funds etc.
That it hasn't been clamped down on further does surprise me. What's the difference, after all? Semantics? Lotto, pay tax on winnings-payouts themselves. Do banks do the same, and if not, do they also claim the 'prize' as business expenditure? (NB: "Advertising and Promotion" was always a good catch-all for all sort of payments to be made - especially if it was for supposedly 'offshore' activities. Who was going to check?!)
There is no employment relationship between a bank and a borrower. FBT taxes non-cash benefits provided by employers to employees for their work. Totally different relationship and therefore tax rules.
Banks can claim a deduction for contributions as they are incurred in deriving income (mortgage interest). Same as retailers can claim a deduction for cash back when selling items (e.g. laptops) as they are incurred incurred in deriving income (sales income).
Maybe.
But I'm just asking the same question that Terry Boucher has posed in an article on this site, sometime in the past (I don't have the time to hunt out his article) and I'm happy to acknowledge that he knows far more about NZ Tax Law than I do.
The base question is:
"When is all this Property Related Income, that isn't Income because ( your answer above among many others) going to be taxed by the IRD?"
Any good landlord knows that when interest rates go up, rents go up, and when interest rates go down, rents go up then, too.
The problem is, they think this one-way relationship with interest rates also holds regarding house prices, and will be very disappointed to learn that they're unable to pass any capital losses on to their tennants.
I don't recall saying you were. I'm just calling you on your specious reasoning - costs up so rent must go up, yet the reverse was not true. You blame the market, but that's a cop out. You'd likely be the first to call out petrol stations, banks, et al if they never passed on lower costs.
Just because costs are up does not mean a person can put up their prices. The market dictates the price. Lower costs will only be passed on through market competition forcing sellers to lower the price (e.g. competing petrol companies). In my case I was charging below market rent but due to cost increases I was able to pass on some of those costs. So, the market caps the achievable price while costs influence the price set by a seller up to that cap.
Indeed. It's the morality of it that's questionable for me. People need a roof over their head (you know, that basic human need for shelter) so the saying "If I up the rent and they choose to pay it then that's the market" just doesn't sit well with me. Along with food, shelter keeps us alive so people will pay all their take home pay if they have to because they NEED shelter and food.
Where's the limit? How do we feel about the rent being 100% of a renters take home pay? I appreciate that others will have a different view aka 'it's a dog eat dog world' but personally I struggle with the concept of putting others in hardship to further my own cause.
So your charging each tenant $60 more each week - hopefully your tenants are paying less than market rates for their rental - otherwise i suspect you might be looking for new tenants.
Keep in mind your rentals must meet the healthy homes standard - when they are re-let . Good luck finding a tradie to bring them up to scratch in this market.
The question is how much will an empty rental cost you per week- whilst you wait for tradies and inspectors?
Here's an example of how other jurisdiction view items such as Lottery winning. Perhaps New Zealand needs to go down the same route?
"In the United States, lottery winnings are considered as ‘ordinary taxable income’ for both Federal and State Taxes. It means that if you win a lottery, then your tax on lottery winnings will be the same as that of your salary"
"But here, The ANZ will be paying the tax on behalf of the winner!" And in that one sentiment is the essence of the problem. Borrowers do not get to see the costs involved in taking on the commitments they do. Which seems more? $100,000 tax-free or $143,000 with tax payable at the end of the year?
Just give the lucky winner $143,000 and let them deal with the taxation issues.
Are they? ANZ 12m rate is 2.14% in Oz and 3.24% here, so about 2/3 the price. But that is only P&I. If you are interest only, it's 3.88% (so higher than NZ). Im pretty sure they dont do all the large cash incentives there either...
Note that ANZ 12m term deposit rate is 0.20% over the ditch and 1.75% here... so bigger differential.
Even though I bought at the peak price, I am so glad I am able to own a place and live in it. What this does is it makes it even harder for us FHB's to purchase property unless we continue to pray for a housing crash. This has been said for decades, and I still haven't seen any.
I didn't want to wait any longer. The limited rental selection in Auckland is horrendous. Very few "decent" selection for astronomical weekly prices.
My suggestions to potential FHB's, don't be a fool and "wait" for a housing crash. I waited for over 12 years. It never came. I feel like a complete idiot.
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