Well, that did it.
A much higher than expected Q3-2022 CPI inflation level has turbocharged interest rate markets.
And those pressures have spilled over into sharply higher fixed mortgage rates.
The first to move is ANZ, adding between +34 basis points and +55 bps to its fixed rate card.
ANZ's two year rate is now over 6%, well over, and this is the first time it has been this high since November 2011.
In fact, their virtual-6% one year rate is its highest since February 2011.
ANZ has also raised term deposit rates as well, by between +15 bps and +75 bps. That results in its six month rate rising to 3.60% and one year rate rising to 4.30%.
The last time ANZ one year TD rates were at this level was in February 2015.
(ANZ's +75 bps term deposit rise was for their five month offer, but that only raises it to 3.00%, so more of a curve correction than a significant increase).
As ANZ is New Zealand's largest retail bank, it's rate positioning has market influence. There seems little doubt all its rivals will follow. The only question will be when.
From a borrower's point of view, those who were on a two year fixed rate two years ago are going to find the transition tough. In mid October 2020 the two year fixed rate from ANZ was 2.55%. That rate today is now 6.19%. If they took out a $580,000 mortgage in October 2020 (being 80% of the national median house price then of $725,000, their weekly payments will be rising from $532 over the past two years to $818 per week for the next two years. That is a +$286/week jump, or +54%. In anyone's budget, that will hurt.
One useful way to make sense of the 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 19, 2022 | % | % | % | % | % | % | % |
| ANZ | 6.05 +0.55 |
5.99 +0.54 |
6.09 +0.44 |
6.19 +0.44 |
6.29 +0.34 |
7.19 +0.34 |
7.29 +0.34 |
 |
5.50 | 5.45 | 5.65 | 5.75 | 5.95 | 6.09 | 6.09 |
 |
5.49 +0.14 |
5.45 | 5.59 +0.04 |
5.69 +0.10 |
5.89 +0.20 |
5.99 +0.10 |
5.99 |
 |
5.45 | 5.39 | 5.65 | 5.89 | 5.99 | 5.99 | |
 |
5.45 | 5.45 | 5.65 | 5.75 | 5.75 | 5.85 | 5.85 |
| Bank of China | 5.25 | 5.35 | 5.45 | 5.65 | 5.85 | 5.85 | |
| China Construction Bank | 5.50 | 5.65 | 5.65 | 5.95 | 5.95 | 6.85 | 6.85 |
| Co-operative Bank [*FHB special] | 5.35 | 5.25* | 5.65 | 5.75 | 5.95 | 6.09 | 6.09 |
| Heartland Bank | 5.09 | 5.45 | 5.49 | ||||
| HSBC | 5.29 | 5.39 | 5.54 | 5.59 | 5.79 | 5.89 | 5.99 |
| ICBC | 5.35 | 5.25 | 5.35 | 5.45 | 5.69 | 5.89 | 5.99 |
 |
5.29 | 5.29 | 5.45 | 5.49 | 5.75 | 5.79 | 5.79 |
 |
5.25 | 4.99 | 5.45 | 5.49 | 5.59 | 5.75 | 5.75 |
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155 Comments
Check out the ANZ Standard Rates for Standard People. I wonder what they will all be by December ???????
HouseMouse it's time to admit Interest Rates have gone 7 and Up. Just make 7 up yours !
I don't know why some people get so offended.
https://www.youtube.com/watch?v=QIICQemjmNc
Wow.
TA is looking like even more of a clown. A month or two back he said fixed rates wouldn’t go much above the mid 5’s.
so ironic that the Herald - the very entity that have pumped up the bubble shamelessly, with TA and AC as their key cheer leaders - are now publishing sob stories about it all turning to custard.
shameless
Careful guys, I had my comment deleted a couple of days ago, the one describing Orr dressed in a skirt made from Pikopiko leaves performing a Karakia with fellow RBNZ staff on the news of latest CPI figures. These types of comments go against Interest.co community standards.
I wonder whether Alexander & Ashley (sounds like an English brand of fragrant candles) followed their own advice on buying properties and fixing for short terms. Obviously they'd have benefited from earlier years' policy subsidising and pushing up property, but am referring more to the very recent times.
Check independent economist live today evening trying to brainwash......sponsored by real estate agency
Trying to reignite FOMO.
In case you didn't notice there's significant other economic and financial issues permeating through the economy, both nationally and internationally.
Something about a pandemic, and issues in Eastern Europe, that sort of thing.
Spose railing at housings the new railing at pandemic restrictions.
Nah. New Zealand had a huge housing bubble long before the Chinese lab-leak and Putin got sticky fingers and we've been calling it out all along.
Morons just used covid as an excuse to double down on the bubble. Wealth effect and ticket clipping.
Now we have the inevitable result. The brown noise is sounding "across the motu".
I've been reading about a NZ housing bubble for a few decades. Might depend on where you're looking, people here like citing propertytalk, which is somewhere I've never ventured, and they likely have a different view.
Everything is vulnerable to the cost of debt, so the question begs, why is it only housing people that people think is going to face it's reckoning? House prices are faultering, but everything else is still rising.
Yup, food prices are rising but you can't eat your house. Cost of heating is rising so using your house as a source of fuel🔥is as counterproductive. There's no denying the average folk are increasingly being trapped between a rock and a hard place. If the cost of money goes high enough, prices will soon come crashing down. Its debt driven deflation that could be the next battle.
It's the worst country in living memory.
Not according to Robbo. He's always comparing NZ to other countries to point out how the NZ position is relatively better (implicitly because of his behavior and actions).
https://www.newshub.co.nz/home/politics/2022/10/cost-of-living-crisis-n…
Int.co is a good 12 months ahead of the MSM. I direct many younger potential fhb's to this site.
As David Hunter (@DaveHcontrarian) would say....watch and learn
The negative vide is all around me, man. Just today for example chatted with 2 random colleagues I almost never see about how stupid things have got over last few years, especially recently. One said he has about a dozen friends all recently took off to Oz, basically because of NZ house prices. He agreed that Oz is in a bubble and NZ is so bad that Oz is relatively a good deal. The other guy has been following finance stuff for several years and has almost no idea what to do now - looking for value stocks if he can find them.
I have revealed my darkest nightmare (the bond markets) and do not want to talk about that anymore.
I remember the screens being full of Lehman Brothers in 2008. Each morning I wake up and wonder if something like that will break today. Train smash.
The buzz has ended, the night is winding down and the almighty economic hangover is starting to be felt by all. The pain will draw out through next year and everyone, including the MSM (finally, as they could well have been reporting on this to help cut spending a long time ago) is realising the party is over. Some are heading home to save and pay down the mortgage faster in order to weather the storm. There's still a few stragglers at the tail end, having a couple more thinking the party will go forever, those will be the ones who it hurts the most.
by HouseMouse | 11th Oct 22, 4:26pm
It’s getting very boring.
I long ago admitted I was wrong on interest rates.
And Btw there’s no chances fixed rates will get to 7% before Xmas. They almost certainly won’t get there next year either.
by Future | 11th Oct 22, 4:44pm
You should apologise for making false accusations against The Prophet though. Even if your jealousy has got the better of you HouseMouse.
No Chance fixed rates will go to 7% before Xmas you say. Well Santa may just have a little something for you.
Up
15
by HouseMouse | 11th Oct 22, 4:50pm
Yep NO CHANCE.
HouseMouse the more you keep denying Interest Rates Have gone to 7% the more you are Humiliating yourself. Interest Rates are going 7 and Up !
https://www.youtube.com/watch?v=7chv6NfYeu0
This time about a year back 5 year fixed was carded at 2.99% and hardly anyone wanted to lock in at the time, for whatever reason.
Today we have 7.29%.
That's meaty stuff in just a year.
But the same question must be on everyone's mind, as it was back then, "Should I lock in now just in case?" And guess what? The answer will be the same today, for most, as it was 12 months ago.
if it looks like we will get a change in government which will restore the deductibility of interest rates and the incentive to provide rental accommodation in New Zealand.
The self-righteousness of speculators is quite the spectacle... These folk aren't the ones building new supply, just monopolising it.
He didn’t really. He said “thank goodness I stopped producing my table of interest rate figures”.
yet he fails to mention he has spent the past 6 months telling everyone interest rates have peaked and will soon start falling, which will trigger house prices to rise again.
“which will restore the deductibility of interest rates and the incentive to provide rental accommodation in New Zealand.” - well we used to have interest deductibility and it didn’t seem to create enough rental accommodation judging by the prices. You wonder how people can keep rabbiting this crap out.
Does anyone have a good source for population data in NZ? I'd be interested to see what the population stats are for Boomers vs Gen X vs Millenials vs Gen Z. I wonder if as the boomers were the largest generation, Millenials make up the majority of FHB's at present, and it would be interesting to see what level of the population fits this demographic.
The UK inadvertently opened the economic can of worms last week. The one we've been booting down the road for 13 years and more.
I can't see any other direction but up from here, given the fear that must have been instilled into Governments and Central Bankers across the globe.
None of them want to be the next Liz Truss.
This infographic of real house price growth in the last 40 years is wild. Not sure this is a gold medal we want to have….
https://twitter.com/wallstreetsilv/status/1582556167682723840?s=46&t=E3…
Ouch!
Once upon a time I had a $1.4M or so mortgage (as in earlier this year).
Running the numbers I would need $84,000 JUST for the interest and at this rate only - much higher if it was say 7-8%. Plus principal repayments. Before tax that is a $120,000 or so salary, plus insurance, repairs, rates (hello climate change levy) etc. So I'd need a high paying job just for that. And that is before the principal repayments would at say $25,000 a year would take 56 Years!!!
And yes I had some passive income but even then its a drop in the bucket and the new tax rules cripple landlords with high interest rates.
Feel sorry for the young ones that got duped into fomo last year. I guess the investors were "lucky" to have 40% LVRs on them to keep them out.
Real house price growth over the past 40 years. New Zealand really is special.
https://twitter.com/WallStreetSilv/status/1582556167682723840?s=20&t=Vp…
Yip. Imagine we all wake up tommorow and Putin says he is real sorry coz he made a big mistake and all his soldiers can go home again, iran takes back the drones and issues a full refund.. truss makes up with boris who takes over again.. trump says he wont run for Potus again as his ego just isnt up to it, saudis say they will pump a few mill extra barrels to get inflation down and putin turns on the gas tap again to europe who invite him for a glass of chardony and he rsvp and ask if his buddy xi can come coz he read up and realised they never owned taiwan before after all.. . We find out climate change wasnt real and interest rates and mortgage rates all drop to.minus five..orr prints a few billion and hands them to his mates and we all have a bottle of covid and laugb at the prophets 7% nonsense while bitcoin surges and we call our RE guys and order a couple more investment properties.
Property Investors Chat Group NZ:
"wowie... and so it starts.... There is no need for this.. and then the test rates we use will go up so client will get less lending, and then oh that means less people into their own homes or investment properties.. and next the other lenders will follow suit.. -- feeling sad"
With a screenshot of ANZ's fixed rate specials.
That's touching on the real correction that is needed in NZ. When people get a house and pay it down they then buy another house and their views change to seeing the housing as investment and trying to milk it as much as possible. Now this isn't everyone, as a lot of folk are in it for the long term and understand this so they look after tenants, but a lot of them are there for the $$$ and want nothing to do with the people side of it. If everyone took on the responsibility of landlordship and didn't pawn it off on a property manager then we would have a much more understanding country, with more money pumped into innovation and manufacturing instead of a speculative asset.
You'd know about down spruiking hun
Just this week you were learning about the inter-relationship of interest rates and asset prices. Mind you I have had to explain that to you as well and yet you missed the point big time. Still you gripe about economists. In fact you gripe about most occupations hehe
Am I the only one finding this a bit OTT? That is a massive increase in interest rates in a very short time frame. Either the NZ economy is so bloody strong that it can withstand anything, or it will collapse in a heap and the RBNZ will look like an even bigger bunch of numpties when we have deflation and they drop rates back to 0. If interest rates are this high when I have to refix in July next year that will be quite remarkable.
I’ll be fine assuming I keep my job which I think is the case for most of us. Personally I love inflation, it’s inflating away my debt.
My concern is more that we end up back at very low rates and having to create inflation again, the last decade of that sucked. And on top of that we could have high unemployment.
Even if the NZ economy collapses in a heap, that's no guarantee that we will get deflation, or even tame inflation.
England's inflation is at 10% now. Inflation is high all over the world, and we are just a little boat in a big sea.
Yes there has been a massive increase in interest rates in a very short time, but the RBNZ is not driving that. Inflation is driving that.
It is crucial to understand that even if the wheels fall off our economy, then "they" cannot "drop rates back to zero" if global inflation is still raging. They are not all-powerful. Most of our rates are determined by outside forces.
In Adrian Orrs own words:
New Zealand is a ‘price taker’ when it comes to determining the level of long-term interest rates,” he said.
We are a small economy and must accept the fact that saving and investment decisions in the rest of the world determine the bulk of our interest rate levels,” he said.
https://i.stuff.co.nz/business/126856502/adrian-orr-says-reserve-bank-o…
I doubt you will be getting a 7% pay rise and I doubt you will be paying $34 for a burger and chips at the local pub like I saw the other day. Sure we will still have imported inflation, but the local inflation is a big part and it’s mainly driven by low unemployment.
Jimbo. Try to understand that the RBNZ does not control rates.
Look at what happened yesterday.
There was a very high inflation reading. As a result swap rates shot up.and mortgage rates will follow.
RBNZ staff may as well have spent yesterday at the beach gathering pipis.
The INFLATION readings pushed up SWAPS which will push up MORTGAGE RATES.
The RBNZ can muck around with the OCR, sure. But the impact of that on real rates is HIGHLY exaggerated.
A big part of the reason for this unbelievably stupid bubble thar we are in is that the population has been brainwashed into thinking that the RBNZ is more powerful than it is. RBNZ is tiny little cb in a very big global financial system.
THE EMPORER HAS NO CLOTHES and the sooner that people realize that, the sooner they can start making rational investment decisions.
Just think it through. What happened yesterday? What role did the RBNZ play?
annual inflation data sparked a barrage of bank economists demanding steeper rate hikes, but is it the right call?
Annual inflation came in at 7.2% in the September quarter, well above the Reserve Bank of New Zealand's forecast of 6.4%.
The response was swift, with two-year swap rates jumping 20 basis points and market pricing now tipping the official cash rate to go from its current 3.5% to at least 5.4%.
Not everyone agrees massive rate hikes are necessarily the best way forward.
The notion “we need to bludgeon the economy into submission” is only partially true, said economist Cameron Bagrie.
“We need to have a national debate on stimulating supply; we literally need a call to arms,” he said, adding both sides of the political fence need to agree.
“If we don’t get that call to arms, this is not going to be a soft landing; it’s going to be a deep, prolonged recession.”
Bagrie said significant damage has been done to New Zealand’s supply-side capacity.
He said labour supply growth that is now “practically zero” and potential growth is nowhere near the 2-3% that the Treasury is assuming.
Productivity is the best way to protect the economy, he said.
The country needs to prioritise what it can do to reconnect NZ through a supply-side perspective “and at the moment we are not seeing enough urgency around that”.
“What we are seeing is everyone calling for demand management and opposed to supply stim
1 Predict a decent fall in cpi inflation with plenty of advance discussion so that even those who dont follow the economy, get to hear and take note
2 release the cpi figure which even though it is not rising is suddenly seen as terrible news, and loudly proclaim its the worst result possible. Announce interest rates will have to rise dramatically
3 banks immediately "do the right thing", raising swap rates. They are literally laughing to the bank.
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