The next round of floating mortgage rate increases start, taking rates to 7%+ for the first time in eight years

Personal Finance / news

ANZ is the first bank to raise floating mortgage rates following the Wednesday OCR hike. They are passing through the full +50 bps to floating rate borrowers, but only +40 bps to Serious Savers

7th Oct 22, 12:21pm by David Chaston

Image sourced from Shutterstock.com

ANZ is the first to move its floating home loan rates after the RBNZ raised its Office Cash Rate (OCR) on Wednesday.

New Zealand's largest home loan lender said it will raise equivalent rates by the full +50 basis points, effective from Tuesday, October 11 for new business, and from Tuesday, October 25 for existing borrowers and for all revolving credit accounts.

That means their floating home loan interest rate, Flexible home loan interest rate and Blueprint to build (the discounted floating rate for people building their own home) will go up +0.50% pa to 7.34% pa, 7.45% pa and 4.58% pa respectively. They point out that around 90% of their home loan balances are on fixed rates and at this stage these are unchanged.

In addition ANZ's business floating and business overdraft base rates will also go up +0.50% as well.

These new rates above 7% are the first time any mortgage rate has been above 7% sine October 2014 when both ANZ and TSB had 7% rates for a five year fixed term.

Savers aren't getting the full impact however. ANZ says its Serious Saver account rate is only being raised by +40 bps to 2.70% pa. Update: This increase won't apply until Tuesday, November 1, 2022 however.

Now that ANZ has moved, we expect most other banks will now do so quickly.

Here is the running tally of bank changes to floating rates which we will update as each announcement is received.

Floating mortgage rates	Prior rate	*change*	New rate	Existing customers,
	%	bps	%	effective date

RBNZ OCR	3.00	+50	3.50	5 October 2022

ANZ	6.84	+50	7.34	25 October 2022
ASB	6.84
BNZ	6.79
Kiwibank	6.50
Westpac	6.85

Cooperative Bank	6.65
Bank of China	5.45
China Construction Bank	6.50
Heartland Bank	4.99
HSBC	6.79
ICBC	6.00
SBS Bank	6.79
TSB	6.75

We will separately report the fixed rate increases when some arrive.

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86 Comments

by nguturoa | 7th Oct 22, 12:32pm 1665099138

Charging 7.34 but giving back only 2.7. This is interesting.

More than 40% profits for just being the middle man. RBNZ or the most popular government in NZ ever, any comments please?

by Justa comment | 7th Oct 22, 12:58pm 1665100727

Rabo has just moved its premium saver to 3.1%.

by Justa comment | 7th Oct 22, 1:02pm 1665100967

David when is the effective date for the serious saver change?

by David Chaston | 7th Oct 22, 1:08pm 1665101319

Good point. The Serious Saver +40 bps increase doesn't apply until November 1, 2022.

by Justa comment | 7th Oct 22, 2:00pm 1665104428

Thanks David, looks like Rabo is the place to go !! their 3.1% is immediate.

by pankers | 7th Oct 22, 4:38pm 1665113936

Rabo are very good bank but make you choose right rate as I made a mistake and for 1 day they were going to charge me for investing money , however common sense prevailed

by WellingtonInvestor | 7th Oct 22, 6:34pm 1665120861

Isn't it only up to 100k?

by Justa comment | 7th Oct 22, 7:56pm 1665125780

yes 100k limit then 2.6 the rest

by pankers | 9th Oct 22, 8:47pm 1665301675

umm 100k they were only giving 99,995.00 for a one day mistake

by DollarsandSense | 7th Oct 22, 3:02pm 1665108128

and that takes effective from tonight

by Miguel | 7th Oct 22, 12:33pm 1665099195

7% rates in 2022. If only someone had warned us!

by Brock Landers | 7th Oct 22, 1:30pm 1665102603

The unbelievers were numerous.

Many of those that failed to heed His message are about to learn about eternal damnation in negative equity.

by IT GUY | 7th Oct 22, 1:20pm 1665102028

but but but its not even Xmas yet

by Kjeldorian | 7th Oct 22, 2:11pm 1665105072

That is one way to describe what happened.

by HouseMouse | 7th Oct 22, 5:00pm 1665115225

Wasn’t the prophet talking about fixed rates?

Or was he suitably vague like all prophets?

by Future | 8th Oct 22, 9:47am 1665175656

No. Best you back up your claim.

by Dgm | 7th Oct 22, 1:53pm 1665104037

10% is still possible..

by Thats All Folks | 7th Oct 22, 3:00pm 1665108046

The prophet ahead of schedule in 2022, 8% anyone?

by GV 27 | 7th Oct 22, 12:33pm 1665099211

There it is. 7%.

by Justa comment | 7th Oct 22, 12:53pm 1665100396

Yes there it is and it is only Oct. Hail the prophet

by JimboJones | 7th Oct 22, 7:10pm 1665123054

Technically 7% but you can still get 5.5% for 1 year so you’d be stupid to pay 7% under most circumstances. If the 1 or 2 year rate gets to 7% that would be a proper story.

by realterms | 7th Oct 22, 12:34pm 1665099254

More or less as expected. No fixed changes yet though.

by have no idea | 7th Oct 22, 1:21pm 1665102065

Fixed changes will happen when the majority have already refixed. Then the retail banks will start to hike fixed rates.

This will be timed as well as it possibly can to prevent defaults. To protect recent FHB and also the bankers' property investor buddies I'm sure.

If you aren't able to grab a ticket for this train before it leaves the station, then that's unlucky for you.

by Justa comment | 7th Oct 22, 2:52pm 1665107561

yes they may want to allow the ones that bought at the top of the market up until dec last year and fixed for one year a window to re-fix at 5.4%. The FLP will allow them to do this until dec.

by Slapheid | 7th Oct 22, 12:41pm 1665099694

Could someone please break the seal on the scroll in The Prophets absence?

by Future | 7th Oct 22, 2:34pm 1665106452

The Seal has been Broken. This is how the Scroll reads.

Interest Rates will continue to go Up from here and Stay Up for a Long Time.

Banks will sell Mortgages at 10% +. ( Double Digits ). The OCR Forecast Peak Goalposts will continually be Moved Higher and Higher ! 10% Interest Rates Next Year, Guaranteed !

The World will go into the Biggest Financial Crash Ever Recorded !

There will be many many examples here in NZ of Property that once sold for $1,000,000 Sell again at $200,000 or less. -80% Crash in Home Prices will be common. This will take time to play out.

It is NOT about High Interest Rates to Fight Inflation. It IS about High Inflation to Justify High Interest Rates. Ponder on this before the Seal is Broken on the Second Scroll.

The Prophet.

7% Interest Rates this year seemed unbelievable when The Prophet first Prophesied this. But here we are only a few short months later. 10% is coming !

Don't be fooled when you see Swap Rates lower the Interest rates, it's only for a moment. The OCR will continue to Drag Mortgages Higher and Higher.

Once again this will be met with scorn from some, but remember what degree the Vested Interest will go to when their lives depend on Rising Property Prices.

If you need or want to sell then do it Now. Make your Asking Price more attractive than your neighbours. First Offer is usually the Best. Consider selling privately, pass on the agent savings to the new owner, you will both win.

First Home Buyers and Investors need to Wait Wait Wait. You will be rewarded for your Patience .

The Prophet brings the Warnings not to scare people but to Help Prepare the people for what is coming.

The Messenger.

Now that The Prophet and the Messenger have both passed to the other side, I the Apprentice have been anointed to Fight the Good Fight.

The Apprentice.

by Future | 7th Oct 22, 2:39pm 1665106749

Special Thank You to the Legends of the Faith. For you have Fought the Good Fight.

The Prophet would be very Proud of You all !

St Landers - Why buy today when it will be cheaper Tomorrow ? St Landers of Cheaper Tomorrow.

Father Fitzgearld - Ferocious Fighter For Financial Freedoms Of Families.

Reverend Retired Poppy - Relentlessly Rebuking the Reprehensible Realtors.

Illui Independent Observer - Independently Investigating Intelligence Information.

Deacon DDDDebt - Deeply Discouraging the Desperate from going Deep into Debt.

Incumbent Inkimpaul - Identifying Increasing Irregularities In Institutes Illusions.

The Apprentice.

by RickStrauss | 7th Oct 22, 2:52pm 1665107568

Capital post, old chap

by Nellbell | 7th Oct 22, 3:06pm 1665108361

Hey you forgot Miguel

by Independent_Observer | 7th Oct 22, 7:18pm 1665123483

Is this the resurrection of the prophet or the rise of one of his disciples?

https://live.staticflickr.com/65535/47633739151_fd8fbac495_b.jpg

by Rob Reid | 9th Oct 22, 10:05pm 1665306310

Could well be the prophet. In the background that looks like Carterton.

by nguturoa | 7th Oct 22, 2:56pm 1665107770

How long to wait? One year or few years?

by Gummy Bear Hero | 7th Oct 22, 12:43pm 1665099795

Two quotes from Dr Zachary Smith ( Lost in Space ) spring to mind :

1 : ... "oh the pain , the pain ... the pain of it all " ...

... & ...

2 : ... " we're doomed ! "

by Richardfromauckland | 7th Oct 22, 1:11pm 1665101478

Or Kurtz: 'the horror, the horror'

by Happy_Medium | 7th Oct 22, 4:02pm 1665111733

Or Alferd Packer from Cannibal! The Musical:

“Probably the most important thing is that when things get really bad and the world looks its darkest, you just have to throw up your hands and say "Well, alright!" cause it's probably gonna get a whole hell of a lot worse.”

by RickStrauss | 7th Oct 22, 4:14pm 1665112489

Have a shpadoinkle day.

by Happy_Medium | 7th Oct 22, 5:44pm 1665117860

by taimaiakka0 | 7th Oct 22, 12:48pm 1665100111

So we see rates in 7s% before X'mas but no 30% fall yet

by General Comment | 7th Oct 22, 1:10pm 1665101422

Glass half full? Or glass only half full?

by Brock Landers | 7th Oct 22, 1:16pm 1665101770

It will be Wellington first.

by Jonny_Utah | 7th Oct 22, 1:59pm 1665104356

Discounted future cash flow analysis states this is inevitable. Animal spirits may say otherwise.

Anyone expecting an immediate correction will be disappointed. It will take years to shake out.

by kiwimm | 7th Oct 22, 2:28pm 1665106112

5 years is the average peak to through for a housing market bust. Normally U-shaped so the rate of decline slows over time.

I'm holding out for a 2027 bargain :)

by EarlyMillenial | 7th Oct 22, 2:45pm 1665107125

I've waited years. I can wait years.

by foreverimmigrant | 7th Oct 22, 2:53pm 1665107595

Same

by DrBob | 7th Oct 22, 2:35pm 1665106533

I live in a central Wellington suburb. My home’s homes.co.nz estimate is already down 33% from its peak. Yes, homes.co.nz is just an algorithmic estimate, but it frames buyer expectations.

by Nellbell | 7th Oct 22, 3:01pm 1665108111

When can we get rid of Homes.co.nz. In our area two RE companies have told me that firstly that “the algorithm is wrong” and secondly “that Homes is a year out of date” because it shows the prices surging up, when HPI and all other indicators have our prices decreasing along with everyone else. Both buyers ( who want to list at the Homes price) and buyers ( the odd one paying the Homes estimate) are confused and mislead.The whole thing is immoral

by Carlos67 | 7th Oct 22, 5:23pm 1665116599

Why don't you get a valuation and send it to homes ? The homes price for my place is spot on.

by Thats All Folks | 7th Oct 22, 7:07pm 1665122841

A work of fiction is never spot on, especially in this market.

by Nellbell | 7th Oct 22, 8:20pm 1665127216

Interesting that values are ok elsewhere. Might be to do with low sales volumes here? Both RE company have been in discussion with Homes.

by Carlos67 | 8th Oct 22, 7:08am 1665166107

Not sure why homes would upset you so much when you can fix it if it bothers you that much. My place down here in Tauranga now has the mid point sale price just above the latest RV. Wouldn't sell it for that anyway because the location is irreplaceable and it would cost way more than that now to build new.

by kpnuts | 7th Oct 22, 5:38pm 1665117526

15-20% Of peak plus cpi at 7% -- its very close and still nearly 3 months to go --- never doubt the prophet!

by fortunr | 9th Oct 22, 5:27pm 1665289674

Residential housing is not a liquid asset. It will take a few more months before the 30% decrease (in nominal terms) begins to appear, in Wellington first and then in the rest of the Country. In real terms, I would expect an overall decrease by at least 40%, which would only bring prices down to some kind of sustainable level for the first time in many years.

by gnx | 9th Oct 22, 9:32pm 1665304376

How will they be sustainable?

with high interest rates they will still be unaffordable

this market could be in for one hell of a crash to get back to affordable

60-70% is my guess

by Nifty1 | 7th Oct 22, 12:52pm 1665100328

They point out that around 90% of their home loan balances are on fixed rates and at this stage these are unchanged.

7% rate but barely impacting anyone..

by Justa comment | 7th Oct 22, 12:56pm 1665100603

They are just blocking the option of floating for those who dream that rates will fall back to 3% in 6 months, will not happen of course.

by Carlos67 | 7th Oct 22, 1:36pm 1665103002

People have had 6 months to break and refix their mortgage. The RBNZ have never been clearer that they were going to raise rates, I mean were you waiting for the e-mail to confirm it or something ? Another 50ps rise in November, those people now in car smash or heading for one this year were asleep at the wheel.

by kiwimm | 7th Oct 22, 2:29pm 1665106177

10% of people is not barely anyone. How many people need to be affected to turn a market?

by Jonny_Utah | 7th Oct 22, 3:09pm 1665108580

We sold our place a few months ago. Took ages to sell and was on a long chain and subject to sale of.

We also sold to a divorcee who was in a position of having to buy. That one cash buyer that set the whole thing in motion was the catalyst. Those 10% are of vital importance to the function of the market.

by kpnuts | 7th Oct 22, 5:40pm 1665117645

well seemingly the 5=7% of foreign buyers were doing that prior to their ban .....

by Justa comment | 7th Oct 22, 1:03pm 1665101014

Well done ANZ and Rabo, first to raise savings account rates. Lets see who is last.

by DTRH | 7th Oct 22, 1:22pm 1665102126

Housing price crash is picking up speed. With NZD tanking 18% against USD we will see inflation stay way above target levels, rates continue to climb, floating rates could hit 8% before year end.

by Adam B NZ | 7th Oct 22, 1:53pm 1665104030

Don't worry everyone. The half a million Kiwi's that are coming back are all cashed up buyers that can afford high interest rates.

by DTRH | 7th Oct 22, 4:08pm 1665112116

Why would 10% of population come back to NZ when house price’s in Auckland are 10 x average wage couples income. From what I can see a large amounts of kiwi going to Australia to live. Once the housing market has completed its crash people might come back.

by Carlos67 | 7th Oct 22, 5:26pm 1665116805

People will start coming back to NZ the second the rest of the world turns to shit it will have nothing to do with our house prices.

by Brock Landers | 7th Oct 22, 7:05pm 1665122731

Like when "Australia is uninhabitable in ten years". Or when your hero Vladimir Putin uses nukes?

by Kate | 7th Oct 22, 10:25pm 1665134747

Or when Trump is arrested.

by Small Kev | 7th Oct 22, 11:05pm 1665137153

UK nearly turned into sh*t..

by Carlos67 | 8th Oct 22, 6:55am 1665165358

Just goes to show you how many countries are sailing that close to the wind. One wrong public announcement and you cross the line.

by Kiwi Kangaroo | 7th Oct 22, 6:54pm 1665122098

Yes,I agree with you DTRH. We were planning to return to NZ next year to retire (as cash buyers), now we plan to hold off til 2025 or 2026 to allow for further falls in the still overpriced NZ property market, and for the dust to settle a bit on the stressed global economy. We can continue to work here in Perth, on good money and cut our hours significantly as Aussie offers great tax benefits inside Aussie super schemes to make it easy for over 60’s to make the same income as they transition to retirement and cut their working hours. Like many kiwi expats here, we don’t have to move and can afford to wait it out until the circumstances are more conducive to the move. Commenters here waiting for the big return of Kiwi expats in next year, don’t hold your breath. Anecdotally, I have just had two younger family members make the move to Aus, and three of my friends in NZ have just had their adult kids move to WA, QLD, and SA in past year. All have bought good sized homes and are earning about 30 to 40 % more here. No brainer in their most productive working years. We love NZ and want to return for family reasons, but are not prepared to throw silly money away to do it based on sentiment.

by Adam B NZ | 8th Oct 22, 7:03am 1665165835

I was joking DTRH! You obviously didn't get it.

by DollarsandSense | 7th Oct 22, 2:25pm 1665105914

Okay so ANZ raises floating loan rate by 0.50% ... and boom they just printed another $10.186mio in profit (minimum)

Numbers from June 2022 RBNZ dashboard. ANZ Housing loans $101.864billion, ANZ says 90% fixed and 10% floating = floating amount $10.1864billion - assume they fund all of those loans at their Serious Saver rate (which we all know they don't as some of their funding is a cheap as 0% - cheque accounts with no interest) then the extra 0.10% margin by only lifting by 0.40% instead of the amount they lifted the floating loans by is per annum $10,184,400 in extra profit or $27,907 per day, or enough to fund or conservatively 4x ANZ NZ CEO's annual salary - phew not a bad day's work eh

by RickStrauss | 7th Oct 22, 2:28pm 1665106108

That profit is supported by the FLP as well as these higher rates. Quite the corporate welfarism.

by MisterB | 7th Oct 22, 3:37pm 1665110266

That depends on whether they need to increase debt provisioning. Keep in mind to increased capital obligations put on banks by RBNZ (which is prudent)

I expect their treasurer funds floating mortgages at OCR rate though, not savings (or TD for that matter) which went up immediately.

by DollarsandSense | 7th Oct 22, 3:48pm 1665110882

Please increase debt provisioning? Have you seen the numbers currently provisioned at 30 Jun 2022 - $135mio out of $101bil

Don't think their treasurer funds all floating loans at OCR as that would be far too expensive when you get funds from other sources much cheaper. In short they are widening their margins and printing more money

by Averageman | 7th Oct 22, 2:34pm 1665106443

Boom

by albinodog | 7th Oct 22, 2:46pm 1665107171

I cracked open a cold asahi to pay my respects to the all seeing prophet.

And the heretics still in denial stating that there were no instant drop of home prices.

Patience my sweet summer child..

by Carlos67 | 7th Oct 22, 5:29pm 1665116961

I'm with the DGMs on this one and still waiting for the crash.

by taimaiakka0 | 7th Oct 22, 3:30pm 1665109837

If some are feeling that housing market has dropped and is time for turnaround or even flattening, wait for next year as the real effect of rising OCR has not kicked in.

Noe the sentiment is down but it will be real bad when it hit the pocket, which for many will be by next year.

So anyone planing to sell should rush with realistic price

https://www.afr.com/property/residential/house-price-falls-will-acceler…

by have no idea | 7th Oct 22, 5:44pm 1665117865

Christmas period could be a telling sign for where the economy is going.

by WatchItFall | 7th Oct 22, 3:40pm 1665110455

Surely the moderators will see fit to reinstate the prophet now that his proclamations have come true? He wasn't spamming, he was merely trying to help the spruikers to see the light! It takes a lot to penetrate their eternal hope that NZ is different and that the basics of the relationship between interest rates and the size of the mortgage that can be serviced are an eternal truth.

7% 7% 7% - we shall never doubt again!

by Stephen06 | 7th Oct 22, 4:14pm 1665112498

It is time savers got a better deal, having been through the lows of Covid - Orr misread the tea leaves on that one.

Show me the money!!

PS. mortgage free and darn glad I am too.

by j fletch | 8th Oct 22, 5:12pm 1665202366

PS. Me too foot loose financially free.. banks are wanks

by WellingtonInvestor | 7th Oct 22, 6:36pm 1665120967

So if they are not passing on the full % to savers, but they are to mortgage holders, are they just making extra profit at the expense of savers?

by Stephen06 | 10th Oct 22, 7:55am 1665341735

Yes, and your logic is sound.

by quality guy | 9th Oct 22, 9:27pm 1665304054

I don't know why some are so worried about a 30% fall. It will take 46% drop from the November 2021 peak to undo all gains since 1st January 2020.

Is a 46% drop really a crash?

Or is it a correction to realistic prices?

The ponzi scheme still needs to deflate. Oh there's that word "deflate". I see that word becoming common everywhere in 2023.

Just be thankful you don't live in Uk where your gas prices are 10 times what they were at the start of the year. There's quite a bit of deflating going on in the European economies right now.

But it's ok we won't be effected.

by OldSkoolEconomics | 10th Oct 22, 7:17am 1665339457

No reason to think they will only drop 46%. I the ireland crash they dropped 60% in some places and i dont think the prices were as overinflated as here. And the economic situation coupled with geopolitics and right-wing-swing wasnt nearly as serious.

One things for sure, there are some real bargains on Trademe at the moment.. people staring selling off unwanted expensive toys purchased in the boom time ? - great bargains for those who were prudent.