The last of the big Aussie-owned banks have now pushed through their fixed home loan rate increases for this cycle.
ASB has decided that they will match ANZ's rates, the bank who started this round earlier in the week (on Monday).
Kiwibank is yet to declare their hand. Typically Kiwibank's rate announcements come on Mondays.
That means we go into the Matariki weekend with a new pattern of fixed mortgage rates from the majors.
For one year fixed, they have all adopted 5.35% except Kiwibank who is still on 4.85%.
For eighteen months, ANZ and ASB are on 5.65% while BNZ and Westpac have a -6 bps advantage on 5.59%.
For two years, ANZ and ASB are on 5.80%, BNZ and Westpac are -11 bps lower on 5.69% and Kiwibank is still another -50 bps lower again on 5.19%.
All the Aussie banks are offering 5.99% for a fixed three year term while Kiwibank is still at 5.39%.
For four and five years, there is more separation although the highest rates are offered by ANZ and ASB. The Kiwibank 5.55% looks especially attractive for four years, a whole-of-market low. It won't last.
This week's sharp rises come as financial markets are showing second thoughts about future bond yield direction. Swap rates slipped all week and will undoubtedly follow international markets down again today. Those financial markets will be operating normally over the next two days and will probably extend their 'fear' reactions while we are on holiday.
This mortgage rate hiking cycle could well top out for a while.
In fact it is worth noting that yesterday, Australian bond yields and wholesale money costs retreated quite sharply after a strong run-up, a move not matched in New Zealand. It would not be a surprise if local markets played catchup today - and if that trend continues while we are on our break, the Monday readjustment could be notable.
Meanwhile, ASB has raised its term deposit offers at the same time. But again, all they have done is mirror ANZ.
It will be interesting to learn the new Kiwibank rate card when it comes. The big Aussie banks may not be colluding in their home loan rates or their term deposit rates, but the resulting levels show them happy to all fall in line together in the part of the market where most of the deals are done. Will Kiwibank also take that comfortable position too?
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 June 23, 2022 | % | % | % | % | % | % | % |
| ANZ | 5.35 | 5.35 | 5.65 | 5.80 | 5.99 | 6.85 | 6.95 |
 |
5.35 +0.40 |
5.35 +0.50 |
5.65 +0.56 |
5.80 +0.45 |
5.99 +0.34 |
6.85 +0.50 |
6.95 +0.50 |
 |
4.99 | 5.35 | 5.59 | 5.69 | 5.99 | 6.09 | 6.19 |
 |
5.10 | 4.85 | 5.19 | 5.39 | 5.55 | 5.79 | |
 |
5.35 | 5.35 | 5.59 | 5.69 | 5.99 | 6.29 | 6.39 |
| Bank of China | 4.65 | 4.95 | 5.25 | 5.55 | 5.85 | 6.00 | |
| China Construction Bank | 5.35 | 5.35 | 5.65 | 5.80 | 5.99 | 6.85 | 6.85 |
| Co-operative Bank | 4.85 | 4.85 | 5.15 | 5.35 | 5.65 | 6.35 | 6.45 |
| Heartland Bank | 4.40 | 4.90 | 5.10 | ||||
| HSBC | 5.29 | 5.19 | 5.55 | 5.69 | 5.89 | 6.59 | 669 |
| ICBC | 4.39 | 4.45 | 4.85 | 5.09 | 5.45 | 5.69 | 5.89 |
 |
4.65 | 4.55 | 4.89 | 5.19 | 5.39 | 5.79 | 5.95 |
 |
4.45 | 4.34 | 4.90 | 4.99 | 5.35 | 5.55 | 5.75 |
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67 Comments
Sooner the prices drop the better - i like NZ but I have kids who will want a house and decent services, i want decent healthcare, education, retirement, less crime etc.
To get all that - we need a decent drop. So we might as well get it over with by hiking rates sooner, stopping inflation sooner - and then rebuild the economy a better way. The alternative is to have a long drawn out fight to stop an inevitable price drop that will only make matters worse long term.
The sooner people stop acting like there is no downsides to prices dropping, the better. Then we can have an actual conversation about how we get there, as opposed to pretending that people won't suffer extreme financial stress and mental illness if they end up underwater. I'm in favour of it, but I think people here drastically underestimate the effect it will have on young people who have pushed themselves to get an unreasonably large deposit together, only to be wiped out.
There will be a downside but only way forward is to accept house price’s were way over valued compared to income if people did get fooled by FOMO and emergency low rates and thinking they will never go back up. With rates and inflation climbing house price’s will continue too fall and anyone over leveraged will lose deposit and be in negative equity by next year. A huge number of people who purchase last year were buying and selling in same market and made plenty on way up now time to give some back.
It cuts both ways.
We have been ignoring the effects on the mental health of renters and aspiring first home buyers for years. The people who have been stuck on the bottom half of the "K" shaped recovery for years now.
Any attempt to talk about the negative mental health impacts of 30% per annum house price rises has been met with snorts of derision and "haw haw haw" type responses from asset owners.
If you want to know about financial stress, ask a renter (disproportionately of Maori descent) how it feels to be continually squeezed for more rent (NZ has the highest rent to income levels in the OECD) and having to skip meals or send the kids to school with no shoes because the landlord always wants more money, and home ownership is out of reach.
Absolutely.
Having come from Ireland originally and seeing the damage the GFC had on people's well-being (suicide, marriage breakups, etc) I was acutely aware that house prices don't just increase forever.
I have watched all the people around me in NZ buy houses and have been jeered by them regularly when I try to float the concept of house price falls or that I just can't bring myself to spend $800k (a few years ago now since I gave up) for a house made of sticks and tin which hasn't seen maintenance since the 70s and has the carpet, kitchen, and bathroom to prove it.
It has really gotten me down over the past few years seeing the prices run away further as though completely independent of any fundamental cost v value consideration. I decided to do something about it and will be leaving NZ for Australia later this year.
It will be very upsetting for those who have bought recently or are completely over-leveraged if this current trend continues, which it will because even those at the centre of the hivemind echo chamber are losing confidence.
However, you would hope that the hardship they will face force them to challenge the nonsense that has been transpiring in New Zealand. The drive to buy houses no matter the cost and reserve bank representatives/politicians falling over themself to facilitate people to fill their boots with debt.
It's as though the lunatics have been running the asylum for at least the last decade.
Rates won’t go back down until inflation is under control and the chances of that happening by 2023 are slim, when we finally get inflation down to 2% level only a complete idiot would lower them back to levels they have been, this game of zero rates and money printing is over.
Nice. :)
On another note, we might see middling interest rates for a while but double figures are a non-starter. The Fed is absolutely unable to raise rates too far due to the Trillions it has in debt and therefore the exorbitant amount of interest they would have to pay on that debt.
DTHR, "Rates won’t go back down until inflation is under control", that's the rhetoric now but it will change when the recession starts biting hard in early 2023, businesses closing down, people being made redundant, people not being able to pay their mortgages others not being able to make ends meet much worse than now… You will see, the RBNZ's famous "path of least regrets" will shift to "let's avoid shocks that bankrupt businesses and limit the unemployment rising to 10%
NZD already down around 14% and our OCR is higher than US Europe Australia. NZD will get crushed if we do our own thing and don’t keep in step. FED would not even consider destroying USD by going back to zero rates creating crazy high inflation for years. No we will have higher rates for years asset prices will crater and in New Zealand that is house prices.
I could definitely see rates dropping again, I just hope that we might take a lesson from the fallout that seems to be approaching and see that having low rates for long periods isn't all sunshine and roses.
As it stands monetary policy seems to involve blowing an asset bubble when the economy needs stimulating and popping it when things get overcooked.
We need to go back to the drawing board because this shit ain't working.
It is not working because the RBNZ has been managed by idiots since Orr came to the helm. They could easily have adopted a less recklessly loose monetary policy while still supporting the NZ economy, and also they could have started tightening much earlier, when it was clear to almost everybody that this was the necessary step to take. Now they (and we all, sadly) are going to be stuck in a boom-and-bust cycle, situation of which they are one of the main causes (the "funny" thing is that avoiding such scenario is precisely one of the very reasons why we have a central bank in the first place).
We keep being told that inflation is largely a result of external factors, so does it make any difference if the OCR is raised? Any difference if it is 4% or 0.5%? If we end up in a recession (arguably there already), surely the Reserve Bank will need to reduce the OCR again?
If they can't manage inflation, then surely it's better to keep rates low? What other reason would the Reserve Bank have to increase rates (increasing the unemployment rate?)? It seems to me that there's way too much debt in the system, and the banks need this to continue?
Just a little confused how this plays out.
“If they can't manage inflation, then surely it's better to keep rates low? What other reason would the Reserve Bank have to increase rates (increasing the unemployment rate?)? It seems to me that there's way too much debt in the system, and the banks need this to continue?”
Exactly like they've decided to live with Covid, endless lockdowns won’t help but adding stress on mental health and damage business.
High rates won’t last long.
Yes.
If it doesn't drop to a level I can afford and one that actually reflects the value of the house i.e if it's a 100year old wooden rot box then it's pretty much land value as opposed to a near new double glazed etc.
If not then I'll stay homeless, sort of.
Ironically the rules around kiwisaver and grants and tax deductibility of interest etc make it harder to buy for the future while I'm in a service tenancy.
You can see the problem we will soon face ... home prices much lower than new Build prices unless section values drop through the floor ... I've seen locally section values go from 100-150k+ to 370k-450k+ in 5-6yrs..thats insane and been fuelled by dirt cheap leading an a outlook of lower rates for longer ...Now we have rates flying up 200%+ incoming >>>>which will breaks the whole Property sector in NZ ...watch the bankruptcies spike 2023+ ... this will see the crash we didn't have during the GFC .. can't save the market this time without tanking the NZD and increasing inflation even higher
This is exactly what is going to happen.
The land values are going to go back from 500K for those sections on the outskirts to 150K again. Developers who are land-banking and bought at these prices along with mum and dad investors that bought a couple to quickly put up a cookie cutter house on and flip are all going broke (if the have finance over the land). Imagine paying 7-10% interest on 400-500K section which is now worth only 150K. Many of the developers that are readying all these spec houses for sale on the 500K sections are going to go broke. No one is going to buy these houses when the new sub division down the road is selling sections back at 150K. It's going to be carnage for those involved.
Late entrants and inexperienced developers are indeed going to lose their shirts but the more experienced developers have been there before, most will be ok. Land prices will go back down a bit but nowhere near the prices you're talking about. Remember this is just part of a normal economic cycle.
Looking at the last two years its hard not to see the "bull trap" from the bubble model. This sees astronomical prices being paid, fueled by the last of the winds of artificial cheap debt. Add in a pool of addict like hardcore specuvestor's injecting themselves endlessly with that cheap debt, solely for the self of interest of income tax relief and speculative capital gain, and you have the mess we see now. The winds of cheap forever loans has ceased to blow, no longer lifting speculative debt. Quite literally Specarus's wings have melted off, and he is now falling back to earth.
Based on the bubble model, we are in the denial phase. This is followed by fear, desperation, panic and then capitulation as prices return to mean. Interesting the denial phase often sees the term "I'm in it for the long term" used. This probably applies equally to crypto.
I will again be voting for the elimination of debt based rent enslavement. That means a party pushing DTI of 3-4 for residential investment property, and no return of interest on debt income tax offset. That "investment" model has driven the largest rift in equality in this country, and only lined the pockets of bankers and speculators at the expense of ordinary citizens and taxpayers.
Clearly that means National is off the table as an option.
Agree, National is clearly going to push easy credit by: incentivising debt, eliminating responsible lending rules, and preventing the RBNZ from implementing and maintaining macroprudential limits (DTI, LVR). Anything and everything to continue the transfer of wealth from young to old and from the poor to the asset holders.
No they won't. National supporters are not the property gamblers, they are usually the well established investors that are not going to be hurt too much. To them, this is a market down turn just like any other. They will hold tight because they can and the market will come again when sense returns. They will do some tweaking with tax rules and just let the carnage continue. They can blame it all on Labour, because that is the way things are done, and rightly so, because all of their polices were either not enacted or fell flat on their face and failed, and then also compounded all these problems. Everyones housing asset value will be down, but only a small number of actual owners who live in said houses will be effected at all. All of the loss of value will be blamed on Labour. So, National can let the carnage continue for probably two years and justifiably blame Labour. The market will correct itself when the bad operators and speculators have all gone broke and sanity returns. National will claim credit for this, but will have had to do nothing about it.
Not at all. One of Luxons first policy statements was reversing the changes around interest deductibility on investment housing debt. Not infrastructure development, not hydrogen, solar, hydro or geothermal development, not creating additional export revenue. Just minimising tax on rental debt.
Shows the focus. Bankers profits.
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