With swap rates flat-lining over the past 10 days after a retreat from early May peaking, it may seem unexpected that we have fixed rate changes to report Monday.
But clearly the Reserve Bank's monetary policy review last Wednesday has given some banks the conviction to adjust their fixed rate home loan offers.
The first to move is Kiwibank who have added +30 basis points (bps) to their fixed six-month and fixed one-year home loan rates.
After the change, they now 'lead' the market with the highest offers for each of these two fixed terms.
They are unlikely to have this distinction for long. We expect other banks will follow soon, this week.
Kiwibank also added +10 bps to +25 bps to all its term deposit rates for terms of one year and less.
This comes after they were the first to move up for their home loan floating rates, and some key savings rates after Wednesday's 50 basis points Official Cash Rate increase.
Here is a ready reckoner for what you can expect. If you had a two year fixed rate locked in two years ago, you would have been on about a 3.35% rate. Much has changed since, so this table will give you an idea about what could happen since then (that is, the difference in monthly payments).
| Loan amount ► | $250,000 | $350,000 | $450,000 | $550,000 | $650,000 | $750,000 |
| Interest rate ▼ |
∆ | ∆ | ∆ | ∆ | ∆ | ∆ |
| 5.00% | +240 | +337 | +433 | +529 | +624 | +721 |
| 5.25% | +279 | +391 | +502 | +613 | +724 | +837 |
| 5.50% | +317 | +445 | +572 | +699 | +826 | +953 |
| 5.75% | +357 | +501 | +643 | +786 | +1108 | +1072 |
| 6.00% | +397 | +556 | +715 | +874 | +1032 | +1192 |
| 6.25% | +437 | +613 | +788 | +962 | +1137 | +1313 |
| 6.50% | +478 | +670 | +861 | +1052 | +1243 | +1436 |
| 6.75% | +519 | +728 | +936 | +1143 | +1351 | +1559 |
| 7.00% | +561 | +787 | +1011 | +1235 | +1459 | +1685 |
The one, two and three year swap rates have had their recent top taken off the 2022 rise. But they remain elevated and the settling back trend seems to have ended. Last Wednesday's RBNZ signals gave it a renewed upward momentum. This is most pronounced at the short end of the swaps curve with the one year pushing up to 3.46%, its highest level since April 2015. (Back then, Kiwibank was offering a one year mortgage rate at 5.69% and the average for all the five big home loan lenders was 5.65%).
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 May 30, 2022 | % | % | % | % | % | % | % |
| ANZ | 4.65 | 4.55 | 4.90 | 5.25 | 5.55 | 6.35 | 6.45 |
 |
4.49 | 4.49 | 4.85 | 5.25 | 5.55 | 6.35 | 6.45 |
 |
4.39 | 4.55 | 4.90 | 5.25 | 5.45 | 5.79 | 5.99 |
 |
5.10 +0.30 |
4.85 +0.30 |
5.19 | 5.39 | 5.55 | 5.79 | |
 |
4.59 | 4.49 | 4.89 | 5.19 | 5.49 | 5.79 | 5.89 |
| Bank of China | 4.25 | 4.65 | 4.95 | 5.25 | 5.65 | 5.85 | |
| China Construction Bank | 4.35 | 4.45 | 4.85 | 5.19 | 5.45 | 6.15 | 6.35 |
| Co-operative Bank | 4.29 | 4.29 | 4.85 | 5.19 | 5.45 | 5.75 | 5.95 |
| Heartland Bank | 3.85 | 4.70 | 4.84 | ||||
| HSBC | 4.49 | 4.39 | 4.89 | 5.15 | 5.39 | 5.69 | 5.89 |
| ICBC | 4.39 | 4.29 | 4.79 | 5.09 | 5.35 | 5.65 | 5.89 |
 |
4.49 | 4.19 | 4.69 | 4.85 | 4.99 | 5.45 | 5.95 |
 |
4.45 | 4.34 | 4.90 | 4.99 | 5.35 | 5.55 | 5.75 |
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107 Comments
I doubt that interest rates will prove to be the big bogie for the housing market that some here make out.
Most home owners/investors realised that the recent period of ultra-low interest rates would likely be short-lived - and factored that into their borrowing decisions......
Thus, not surprising that the magnitude of house price falls over the past 6-7 months has been small - and certainly far less than the magnitude of house price increases through 2020/21.
Like it or not, the prospects for a crash/collapse in house prices are bleak. Correction only, I'm afraid.
TTP
Fact checking this using the most commonly referenced table in the interest comments section, c40
It would seem most borrowing decisions among investors and home owner/investors were the complete opposite of this suggestion, most borrowing decisions were in the realm of a DTI > 6 in both groups. The need for cashflow to service interest only debt of this magnitude is a factor of DTI * rate = % of income. For example, DTI 7, rate of 5% = 35% of gross income contributed to interest only payments. Not stonks.
Good to know you're afraid though.
Yep - it's quite alarming.
Those, over 20/21 who fixed for 3years+ will be ok, and those who cashed out will also be ok. For the remainder camped in the DTI 6+ bracket, it's concerning. This group was ~2000 borrowers in March 2021 alone, a lot of borrowers caught up in this unfortunately.
Malamah,
Do you think that rates will be coming down again around 2023/24? Otherwise those are some dark stormclouds on the horizon come renewal time...
I have a net DTI of 3 and have half fixed until 2024 and the other half to 2025, looking to clear as much as possible before then. Would probably be looking to sell up and leave if I had a DTI of 6
I really have no idea, however RBNZ and some of the big four banks are predicting peak in early to mid 2023 according to various articles in this site. They're just predictions though I don't think there's such a thing as a crystal ball.
Offsetting mortgages might be a more common theme come 2024, keeping interest payments lower and still maintaining a low interest credit line for rainy days wouldn't be a bad idea.
Spruikers gonna Spruik
When is OneRoof going to start estimating the real prices houses are actually transacting at, I see www.propertyvalue.co.nz has dropped there price estimates back......
ToThePoint we are at the start of an Irish style house price collapse, made worse by an International real estate collapse lead by China and now appearing in the USA (see figures to out around the speed of asking price drops in the USA) .
This is going to be a Crash not Correction, I can see 2019 prices by Xmas and 2017 by the following Xmas, every cloud has a silver lining, once prices finish correcting they will make good investments again!!!!!
Homes.co still living in dreamland. This one here been on market awhile, im sure owners would take $850k, homes value $1.17m down from $1.35m
https://homes.co.nz/address/lower-hutt/waiwhetu/12-hinemoa-street/740Zk
The resident price fixer is being intentionally vague with his rhetoric. A crash is a fall in prices that exceeds 20%.
The prospects of this occurring are, in fact, very high.
A home buyer that put down a 20% deposit last year should be prepared for the likelyhood that all their equity has been wiped out.
I don't think that your average punter does know about the OCR increases and what that means for their mortgage. I think they now mostly have an inkling that house prices are decreasing.
The fact they haven't decreased much so far, is a reasonable indicator that there are still people that clearly have little cognisance of this.
But they do know cheese costs more. They'll also know when they come to re-fix or ask the bank for a top up on the mortgage.
It might still be just a correction and it might be a crash. Anyone who is aware of all the factors would be pretty foolhardy if they were treating this as a dip, rather than feeling there is plenty of time and very good reason to keep their money in their pocket if the price still seems expensive for the return.
I also believe that you know this TTP, but enjoy ruffling feathers around these parts.
TTP, you are correct when you say "Most home owners/investors realised that the recent period of ultra-low interest rates would likely be short-lived - and factored that into their borrowing decisions...."
BUT
It is some home owners / investors who will be catalyst for bigger fall.
Also when going up - momentum is fast on upside and is always slow intially when house prices are falling before gaining momentum and this is not the end of 2 year bull run but two decade of bull run - if one look at bigger picture.
It has never happened before, what is happening now. House prices are falling and interest rates have just started to go up - earlier whenever any indication of market softening, rbnz will intervine and reduce OCR and/or remove LVR so assuming that like earlier it will be shallow is a fallacy.
Wait and Watch
Interesting table, so those with a $1m mortgage (not uncommon in Auckland) refinancing at 6% will need to reduce spending in other areas by $1,500 per month. That's a decent chunk of change.
Will be interested if there are stats on how long people are currently refixing for. Will people be going short to try and prolong the pain?
Is this data available anywhere as I would like to see it.
Anecdotally most people I know have mortgages around $500k and that was for first home purchased around 2016 or so. Is the $390k average AKL figure used from time to time a median or a mean? For the sake of economy and peoples state of mind I hope it is mean...
I've been looking for a month or so - it's difficult to find. The best bet is to combine multiple data sets to provide the average income/average mortgage but that's not great data to work with. Article on interest the other day mentioned the national average mortgage was slightly above $400k, which on it's own is not too bad but if we could see the change in that data over the last two years and consider the amount of new mortgages then you could assume a trend driven by higher and higher mortgages. ie to get from 390k average to 400k average with 1000 new borrowers, the average new borrower amount is x
It is hard to find useful data on lending... and I think this is deliberate.
I'm most interested in debt concentration. The RBNZ used to report on this, but stopped in 2018. Debt was very concentrated back then... you can bet your cotton socks that it is dangerously concentrated right now, far more than in 2018... but RBNZ is not releasing the numbers anymore.
I've checked every RBNZ Financial Stability Report since 2018 and not a mention of debt concentration in any of them. This is where a big chunk of the stability risk lies though... with those extremely indebted, multiple mortgage households.
https://i.stuff.co.nz/business/money/104323467/reserve-bank-says-8-per-…
Surprising comment from you Pragmatist. I always thought that you were one of the more intelligent contributors to this forum. Maybe you are just having a bad day?
Debt concentration is one of the most important metrics.
It is interesting to know the average debt levels across the population. But averages won't tell us how many mortgagee sales to expect when shtf. The bulk of mortgagee sales will come from the households that have 2, or 3, or 4 or more mortgages.
Back in 2018, debt concentration was considered to be an important metric. Important enough for the RBNZ to report on. But after the Stuff article linked above, the RBNZ went silent and stopped reporting on it.
1) It is the afternoon.
2) Explain yourself. What is "nonsense"? What is "tinfoil hat" about my post?
If you can't or won't explain yourself, then your comments are just baseless and strangely angry ad hominem slurs. Like an old man yelling at clouds.
Maybe your household is one of the ones with multiple mortgages? It is strange that you would suddenly go on the attack like that ... it is not your normal style. Maybe my post hit a nerve?
Debt concentration is probably the biggest financial stability risk that we face right now. It is one thing for a household to face rising interest costs on a single mortgage... but what about those households that are facing rising interest costs on 2, or 3, or 4 or more mortgages? Those are the households that represent a real financial stability risk. I'm fairly certain that RBNZ knows the numbers... they are just not releasing them.
good points on the multiple mortgages --- many people have split into tranches -- good idea but it skews the average figure the people used -- and how many people leveraged up on their homes back to only 20% equity to jump on the gravy train now train wreck that was investment properties in the last year when the DTI rates dropped --- and are now looking at lost to no equity in both properties ..... wont need to be massive numbers of people to speed up the price drop as they desperately try to exit the investment property so they can still pay the increases on teh family home!
Hiding/not publishing the data in similar vein.
They have the data, they no longer publish the data. Suggesting this is real tinfoil stuff would be suggesting that statistics dissipate the moment mainstream media stop publishing them. That line of thinking would be more akin to that of those in tinfoil hats than simply wondering what the statistics are, and why they are no longer published.
With the amount of money pumped out in 20/21 it's hard to say. When you have record stats like $10b lending in a month (~March 2021), it's not easy to find how that money is distributed without number of borrowers. 8% with 40% of debt in the 2022 economy would be a world of hurt.
$327b debt total at 40% is $130b
1.2m mortgage customers at 8% = 96,000
$130b debt divided between 96,000 customers is $1.35m debt each. Uh oh...
Uh oh indeed.
Reckon that the debt would be more concentrated now than the 2018 figure of 8% of households with 40% of the debt.
After the RBNZ removed the LVR limits, there was that big spike in borrowing... many households leveraged up to buy rentals.
Is this a question that interest.co.nz could ask of the RBNZ? What percentage of households hold what percentage of debt?
I’d say at that point, they are just going to go with what is the most they can afford and lock it in for as long as possible. Though if they lock into one year rates they are very likely going to be looking at 6.5% or higher come next year. Some are just going to be caught in the middle and have to switch to paying interest only.
Those without large mortgages which is the majority of the population will be able to increase their spending in the economy since most of their extra income won't need to be saved towards a deposit and they might get a half decent return on savings accounts so it balances out.
I would be interested to see the stats on refixing too, anecdotally from what I have seen and heard it's leaning toward 2 years since people know the RBNZ drop the OCR far quicker than they raise it.
Exactly, just pointing out these are tame increases... and so far by Kiwibank only, days after OCR was increased... Not exactly matching the hysteria last week by the majority of interest.co.nz comments. If you have a mortgage see what kind of discounts you can get off advertised rates... I'm sure you'll find there's movement.
Yeah, there is movement. ;) Some other rates will likely to follow.
ANZ is raising its home loan floating rate by +40 bps, and its business floating and business overdraft base rates will also go up +50 bps. They too are raising some key savings account rates. For Serious Saver, ANZ’s largest savings product, the total interest rate will increase +40 bps to 1.50%.
A loud, late +50 basis points echo. First Kiwibank, next ANZ | interest.co.nz
Floating rate only... days after the OCR increase...
Did you ever correct this false claim?
by company of heroes | 27th May 22, 1:49pm
"Bank lending has decreased". That's not correct. The number of mortgages issued has decreased but that's not equal to bank lending has decreased.
On 27th, Nifty1: "It seems like this has already been priced in"
Kiwi Bank increases its rates...
Then Nifty1: "so far by Kiwibank only" "Pretty tame increases... where's ANZ at?"
ANZ increases its rates
Nifty1: "Floating rate only... days after the OCR increase... "
;)
Pain is starting to get passed on..
Even there was assurity that interest rates are going to stay low for longer.. that story seems like a distant echo...
Neighbors loan is rolling over, in September they budgeted for high 2's.. now are looking at mid 5's. They can't afford that and have approached their bank, but not much support from them..
Ok, let's take a closer look...
I did speak ✅ (but not shout).
At length ❌ (very short comment).
Angry and impassioned ❌ (nope).
I am sorry that you dutifully listened to the spruikers that instructed you to buy in late 2021. But there is no reason to direct your rage at me. I sincerely hope that your mortgage slaving prowess is better than your vocabulary or attention to detail.
Most days I'm too busy running my ventures to substantially add to the commentary. But it's always a quick giggle to quote the eerily accurate prophecies of 2022 and to make jest of the clown world call to action. Is that what you are offended about now?
Sadly, I also don't have much time to indulge your whinge-fest right now. But rest assured there's no anger, only relief. Your animosity about being a spruik-victim is manifesting itself at the wrong target.
I think its very industry specific as to 1) whether a pay rise is coming and 2) what percentage that increase will be. I work for an American teleradiology business and received what equates to a 28% pay increase from which was a very high salary already so are rather fortunate in that regard. My mother who is a PA for a private neurosurgeon just the other week received a 18% pay increase. My brother in the trades however hasnt received a pay increase in over 4 years.
Meanwhile in Aussie, no more loans at more than 7.5x household income at ANZ. Makes you wonder why there were allowed in the first place.
https://www.smh.com.au/business/banking-and-finance/no-appetite-anz-and…
It did seem like madness, but just because someone will lend you a ridiculous amount of money doesn’t mean you have to borrow it. There is still personal responsibility.
Agree, but banks need the punters to keep borrowing increasingly large amounts to meet profit and sale targets.
Having a browse of recent sales and found these in 5 minutes...heres a list of a few houses around Wellington that have sold recently - $285,000 - $500,000 UNDER RV
Only chumps left paying last years prices.
https://homes.co.nz/address/wellington/brooklyn/36-bruce-avenue/kkRJP - 370k under RV
https://homes.co.nz/address/wellington/hataitai/46-konini-road/ybG0e - 370k under RV
https://homes.co.nz/address/wellington/brooklyn/236-ohiro-road/OgLGM - 480k under RV
https://homes.co.nz/address/wellington/kilbirnie/85-kemp-street/nLWeg - 474k under RV
https://homes.co.nz/address/wellington/berhampore/65-te-wharepouri-stre… - 285k under RV
And a couple for sale.
https://homes.co.nz/address/wellington/melrose/94-sutherland-road/Ogw9J - asking 415k under RV
https://homes.co.nz/address/wellington/lyall-bay/240-sutherland-road/Gk… - asking 185k under RV (and 245k under Oct 21 purchase)
mainly small overpriced houses. I have been looking to get a rental and this is a promising trend. The ridiculous prices paid for some properties was unsustainable. However, has there been any more talk of risk based insurance pricing in places like lyall bay and Petone? I have been looking higher above sea level.
This would have been an interesting one with a bit of a tidy up
https://homes.co.nz/address/wellington/houghton-bay/164-the-esplanade/v…
Nearly 1 million under RV
Given the current global conditions.. 30-50% house ptices down from last year sounds about right. However we are now starting from 'known' global issues that will play out in prices over the coming months and years.. the problem will be the risk of another adverse event on top of those at a time when people are getting maxed out?
The deposit is the biggest barrier to entry into the housing market not the repayments.....and the deposit requirements are getting easier every time house prices fall. And if repayments are not affordable at current wage levels as interest rates rise, prices will have to keep falling until they are as all assets are, in the long term, priced based upon the income that the asset derives.
I know this probably doesn't fit well with your property portfolio position, or what is left of it. So you can pretend to be unbiased in your view, but unfortunately its easy enough to see through it :-) Ultimately I doubt that you want affordable houses for other people, as who will live in your rental portfolio if most people can afford to buy their own house?
Even better though, because if Mum and Dad's can't give deposits to their kids as the equity in their own homes/portfolios reduce, that will reduce demand for housing even further.
But as I've been pointing out on the way up, our housing market has had the characterestics of a ponzi scheme, espeically when we've had property investors using equity in previous properties to buy more properties, and Mum and Dad's using equity to help FHB's buy properties.
If those equity levels ever start reducing (say because of rising interest rates in an inflationary environment) that ponzi could implode upon itself as the equity is just paper money....it isn't reflective of actual income/productivity within the economy which is how assets are priced in a sustainable economy/system. Its all been speculation reliant on ever increasing equity (paper value) as a result of falling interest rates/discount rates applied to future cash flows.
At some point we may need to distinguish between paper wealth and real wealth.....I've met quite few people who think they are wealthy because they own real estate but that could be a myth if this QE experiment is reversed due to rising inflation.
For those young couples/individuals who have done that hard yards and have 100-200K sitting there ready to buy a house, every time prices fall, the quality of the home they can afford improves (at a 20% LVR). Or they buy the same quality home before the market started falling, but just with far less debt to pay in the future.
Independant Observer: Ultimately I doubt that you want affordable houses for other people, as who will live in your rental portfolio if most people can afford to buy their own house?
Lol what are you taking about... so many assumptions?
It's just facts that housing affordability isn't getting any easier...
Housing is now the most unaffordable it has been for typical first home buyers since interest.co.nz began producing its Home Loan Affordability reports at the beginning of 2004.
https://www.interest.co.nz/property/115511/flow-effects-reserve-bank-po…
Not a lot of good news...
Here's the first sentence or two of my post (which you appear to have not read)...
"The deposit is the biggest barrier to entry into the housing market not the repayments.....and the deposit requirements are getting easier every time house prices fall"
And if repayments are unaffordable per the link you provided based upon current interest rate rises and static NZ wages....well then per a subsequent point I raised that means there is even further downside risk for property prices.
I'd say this is not a lot of good news for anyone. Previous affordability woes were in the FHB bucket, as once someone is in and has built a little equity and capital gains then the affordability is inflated away. Ever increasing house prices built a barrier to entry. Now that house prices are falling and interest rates are rising, buyers and owners are feeling the pinch equally and we're not even halfway yet according to many inflation predictions.
There are many who will have a low or no mortgage, but for those who don't, especially anyone who bought during the condensed 2019-2021 bubble, affordability will be a concern across the board, not just for the FHB.
With tanking investor volumes, the buoyancy of the market sits with the affordability of housing for the FHB - new money entering the market. That new money is severely constrained by increasing interest rates, and we're witnessing a game of patience. That is how much patience does the seller have? Because the FHB can't get the money to pay the prices some are still asking for.
Not disputing prices are dropping but some quick analysis:
36 Bruce - massive walk up, vendor made $450K in 12 years.
46 Konini - massive walk-up, cheek-by-jowl living, vendor probably lost after fees
236 Ohiro - massive walk-up, doer-upper, hasn't sold since Adam was in short pants.
85 Kemp - distressed investor maybe? Or possibly undisclosed issues? Seems like a genuine bargain if you're into that kind of thing. Vendor made $450K in 14 years.
65 Te Wharepouri - semi-detached, needs modernisation but nothing horrible at a glance. Tiny section and might only have good sun for a short part of the day. Reasonable buy for the right person. Vendor made $800K in 28 years.
If some of the other banks don't come to the party Kiwibank might have to undo its rates rises if it wants any business.
Looks like the big Aussie banks aren't in a hurry to increase them given its been a few days. Then again, swaps ( except for the 1 year) mostly ignored the OCR noise too.
the FOMO part of the Bubble in NZ property is gone ...higher rates will take the majority of FHB out of the market ... but until we see section prices and Build prices lower ... there is going be good support under houses ... Apartments Units as usually will be worse affected ..aka million dollar shoe boxes in poor locations etc
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