As the chart below shows, wholesale swap rates have taken off higher again, accelerating up faster. They are now at seven year highs.
And now banks are forced to respond with matching mortgage rates that are sharply higher too.
The first to move out of their uncomfortable position is market heavyweight ANZ, which now has no carded mortgage rate offers under 4%. We haven't seen that for three years, last in March 2019 for any bank.
Plus they now have rates starting above 6%. No bank has had any rate that high since August 2018.
Back then, rates were falling. Now we are just getting started on the rises. And the rises are coming quickly now. Don't forget we had a 2.90% fixed rate offer in the market just 120 days ago.
Not only have ANZ moved, challenger banks have too. On Monday Heartland Bank, China Construction Bank, and TSB all raised fixed rates.
Wholesale swap rates have been climbing relentlessly recently. And with US Federal Reserve policy rate increases now seemingly locked in the background policy rate direction is clear.
It won't be long before other banks join ANZ with rate cards that have a 6% set.
We should also note that ANZ has raised their term deposit rates sharply too. Most are up between +10 basis points and +30 bps in a steepening of the rate curve.
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.
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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 March 29, 2022 | % | % | % | % | % | % | % |
| ANZ | 4.45 +0.26 |
4.20 +0.21 |
4.55 +0.16 |
4.85 +0.30 |
5.15 +0.40 |
5.99 +0.29 |
6.09 +0.19 |
 |
4.49 | 3.99 | 4.54 | 4.69 | 5.25 | 5.60 | 5.80 |
 |
4.19 | 3.99 | 4.39 | 4.55 | 4.79 | 4.99 | 5.09 |
 |
4.19 | 3.99 | 4.55 | 4.79 | 4.99 | 5.15 | |
 |
4.19 | 3.99 | 4.29 | 4.55 | 4.89 | 4.99 | 5.09 |
| Bank of China | 3.95 | 3.85 | 4.15 | 4.35 | 4.55 | 4.85 | 5.05 |
| China Construction Bank | 4.15 | 3.95 | 4.35 | 4.50 | 4.75 | 5.09 | 5.20 |
| Co-operative Bank [*=FHB] | 3.79 | 3.69* | 4.19 | 4.50 | 4.75 | 4.99 | 5.09 |
| Heartland Bank | 3.49 | 4.05 | 4.25 | ||||
| HSBC | 4.01 | 3.95 | 4.29 | 4.45 | 4.65 | 4.89 | 5.04 |
| ICBC | 3.85 | 3.69 | 3.99 | 4.25 | 4.55 | 4.85 | 5.05 |
 |
3.99 | 3.75 | 4.19 | 4.35 | 4.69 | 4.99 | 5.05 |
 |
3.95 | 3.95 | 4.39 | 4.55 | 4.75 | 4.99 | 5.09 |
Fixed mortgage rates
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106 Comments
Can we just go straight to 10% already? Why not just go all the way and crash the housing market? Why the painful bleeding guys? Better than doing 0.2% increases every month lol So stupid.
Looking forward in seeing the economy & housing crash as well once interest rates are at all time levels, inflation keeps rising because of COVID supply constraints (not demand inflation).
-7
After initially stiffing the Pied Piper, the Mayor of Hamelin offered to pay extra to expedite the return of the town's children. In some accounts the children never return.
Given NZ's housing issues and the potential of an accelerated brain-drain.. the Pied Piper analogy is apt.
Perhaps it should be required reading for our politicians lol =)
Meanwhile at RBNZ, zzzzzz zzzzzz zzzzz. They only have one OCR meeting between the nov and apr meetings. A 0.5% rise almost certain now in the apr meeting, their inflation and emploment mandates are screaming at them. I have noticed the US and GB exchange rates look like they are fully expecting a 0.5% rise also.
I was discussing with some friends over a weekend beer, when you look at the impending cost of climate change.. which is massive! there is a whole shite ton of potential inflation pressure out there.. nothing transitionary about it. Add that to a stack of boomers who want to cash out and start using that cash to sustain themselves, spending money on holidays, services etc. 6% could well just be the start.
This is actually a very good point.
I was thinking something along.
Right, some peps (how many?) will get out of this hell very well cashed. A bit like winning lotto. Newcomers in the ponzi are the ones paying the prize.
Depending on what that "how many" and "how much" it is we might have a very morbid inflationary side effects.
This is a real possibility, an ironic one, people leaving assets will devalue assets but also creating the conditions of higher ocr, which will devalue assets again.
this is going to be so entertaining to watch
Its ok - because the banks were stress testing mortgages:
Here's what you need to know about banks' secret mortgage test rate (article Aug 2020)
This test is done on principal and interest payments over a 30-year term at whatever their servicing rate is, typically between 6 per cent and 7 per cent
So we are fine...as I'm sure rates have now peaked with inflation firmly under control
When interest rate was 3% or 4% and stress testing was at 6% imagine what the stress testing will. E when interest rate is actually 6%.
Many are still not able to u derstand the real implication and still trying to borrow in extreme, not realising as being blinded by FOMO ( Still many FHB are)
This has been one of my trains of thought the last 5-10 years....is when banks are stress testing, do they also consider that if interest rates are at 7-10%, that inflation is also much higher than the 2% we were experiencing....so its not just higher mortgage rates that are chewing up income, but that income is being chewed up simultaneously via higher CPI costs of living on a weekly basis.
Anyone in banking know the answer to this? Or was it assumed that CPI would always be at 2% in terms of weekly expenses, even if mortgage rates went to the highest end of the stress test component?
and there is the first 1 year loan with a 4 in front of it.
hard to believe that only 9 months ago ANZ's 1 year interest rates were a full 2 % lower than today. Effectively a doubling in rates in less than 12 months
I predict ASB will go this week- last week we asked for a 6 month term deposit rate and they would only guarantee the rate until tomorrow and we would have to come in for a new rate this week - understandably we held off
Is this something banks are willing to do? We just signed a conditional SPA to sell our house last night. Looking to move from Auckland to Northland. I would like to keep the 3.00% for 5 years which I locked in around August last year. I was just about to message the bank but wondered if there's a particular way I should go about it. Sale price $1.1m and the loan is about $530k. We don't have a new purchase lined up though so might be tricky but perhaps we could use the cash proceeds from the sale to secure the loan and keep it ticking over for a month or so until we buy something new?
Sure, I agree with that. We do have some leverage though as we might just choose to stay with parents for a while rather than buy again immediately in which case we would not take a new mortgage at all so it might be in the bank's interest to accomodate our request to keep us as a customer.
Llama, in my experience banks don't give a toss about keeping a customer, especially when rates are heading up. And I agree that if you want the right to negotiate you will need to borrow a substantial amount, which in most cases is of no benefit unless you have an investment plan that will bring in extra income on your property.
Nope, it's all about Bail In now. Deposit holders to the rescue.
https://www.rbnz.govt.nz/regulation-and-supervision/banks/open-bank-res…
Just looking at the 1 year fixed mortgage rate low to high is (2.16% -> 3.81%) That's a 76% increase. That ain’t nothing! About a year ago my girlfriend in Germany fixed a 5 year term at 0.6%, now the same rate is 1.6% so that's a 167% increase. That sounds bad but consider the actual nominal increase on a 200K loan. Interest payments are currently 1200 euro per year and after the increase they'd be 3204 euro, pfft who cares. Besides the mortgage is fixed for 5 years so just relax. Pay it off in full when it comes to term. Housing market hasn’t even flinched. Are interest rates so low that increases don’t matter? or are we blissfully unaware of a coming calamity?
0.6 to 6 would be a 900% increase. That's about as likely to happen as time travel. The flip side of low rates are oddly picky banks scrutinizing loans that would have been issued in a heartbeat in NZ. I know what you mean though. NZ is quite a different animal. Million dollar loans on short fixed terms and scary high interest payments in nominal terms.
"Cost of the house in Germany in 2021. The typical home price in Germany is around 320,000 EUR. On average, people spend about 354,000 EUR on buying a house" Germans don't have 800K mortgages. They are not obsessed with property as in New Zealand and use their combined savings mainly to create products which add value!
With swap rates' relentless rise and the banks' NIMs at an all time low, it was just a matter of time until interest rates rose and there is more to come.
Not good for property prices, jobs or the whole economy in general but better than losing control of the inflation runaway train
We cant let it drop right? Because it will be bad for the economy! Sounds like a bull version of DGM..
I don't see it as bad for the economy as a whole. Those the make a living clipping the debt ticket should be worried, anyone over-leveraged perhaps, But house prices can wipe out 50% overnight and the sun will still rise. Corrections are healthy for any market.
And it sure as hell will help a lot of people in now in their 10's, 20's & 30's who are locked out of the market and on a hiding to nothing.
We need a little blood right now. Come on.. it will be fun!
More to the point Astute investors have been preparing for this eventuality.
The vulture calls... its a great time to be debt free! KAAAARKKKK!!!!
A short time ago I would have bet that the upcoming MPR next month would just be a continuation of the same old “wait and see” rubbish from the RBNZ. However I now think we may be in for a surprise. The pressure is now huge for Orr to make a move and with his rumblings of late I feel at least 50 bp is on it’s way.
I think the RBNZ and the Govt have both sent enough subtle messages out in recent weeks that whatever happens now they can say, “We warned you”.
This housing market will be on way down for a number of years people who have a million dollar mortgage will find the payments hard to keep on top of add inflation and seeing deposit gone and in negative equity some people will just sell at loss and over leveraged could just go bankrupt say goodbye to speculators and hello to a place where average wage earners might be able to purchase a house.
Here's an interesting analysis on margin debt that only a few days old
The ones who are are already feeling it right now are those that don't have 20% equity in their property and don't qualify for these 'low' rates e.g. your average FHB. They'd already be pushing on 5%-6%+ atleast... No doubt when many bought recently they'd be under the impression their equity would grow quickly and they'd qualify for lower rates...damn.
In all honesty it sounded almost convincing 12 months ago, after seeing RBNZ unwilling to suggest house prices would drop, and commenters telling us that low interest rates were here to stay.
But some of us said or felt that NZ will always follow the rest of the world, and rates increases off shore will always be echoed here.
Remember though that it takes time for retail rate increases to propagate through the economy as typically mortgages will be on a fixed rate agreement. No doubt though the very low inflation environment that previously existed won't return any time soon, it's long overdue that team transitory concede this and set appropriate rates.
Rising interest rate = slow death but the speed with which interest rates are rising will be doom for over stretched property speculators and even FHB who have borrowed in extreme.
Five years interest rate has almost doubled from 3% to 6%. For every $100000 borrowed for 25 years earlier at 3% was $109 per week, at 5% is $135 and at 6% ( currently on 5 years term) is $149 per week that is appox 35%Jump in mortage.
For $700000 loan it is a jump of $280 per week from $763 per week to $1043 per week and this is just the beginning of rising interest rate and is much more to come, being forced by inflation and economy fundamentals.
If we are lucky, falling house prices will flush out a lot of houses that have been sitting empty (Gareth Morgan style, "tenants just wreck the carpets")
As prices fall, there will be less incentive to hoard empty houses and hopefully they will come onto the market to be used as rentals/OO.
Rising house prices didn't help the emergency housing waiting list to reduce. We can only hope that falling prices will.
It is going to depend on the US Fed.
They have penciled in 7 raises this time to their rate (this year). That will mean 7 more for us, at least, plus more to subdue inflation. If they raise 7 times and we also do, that will add almost 2pc to the OCR. We are going to have to go higher again to subdue inflation, otherwise our dollar will crash and we will import yet more inflation.
Expect rates of 10% if not more at peak.
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