There have been home loan rate changes up (main banks) and down (challenger bank) this week. We update who has changed what, and review what fixed terms are the most popular, and how that popularity has changed

Westpac has raised most of its key fixed home loan rates today (Friday), following on from BNZ's rate rises Thursday.

And Heartland Bank has chimed in this week with some fixed rate reductions.

These come despite little recent change in wholesale swap rate levels at the short end, and no recent changes in term deposit offer rates.

Home loan interest rates have been rising since the Reserve Bank (RBNZ) started to raise its benchmark Official Cash Rate (OCR) in October 2021. And floating rates have pretty much followed that.

On fixed rates, banks have fallen into a habit of making much smaller changes but more frequently, and this has the 'advantage' of keeping them a low target.

So it is worthwhile to take a look at how carded mortgage rate offers have changed over this period. We are in a low-activity period in our housing cycle with unusually low transaction volumes and a once-in-a-generation event (or once in two generations?) of falling house prices.

What we have ended up with is a very narrow rate curve with rates for most terms bunched together, and in fact with some of the longer rates lower than the shorter ones.

But we have also recently had a data drop from the RBNZ that allows us a new perspective on how new borrowers focus on the fixed terms they choose. There is more variability here than you might expect.

Surprising (to me at least) is now much floating rate commitments still feature for new borrowers. This is still the most expensive mortgage rate you can have, and with each OCR change it kicks in quickly. But in April 2023, more than 20% of all these new mortgages were put on this rate. And it is not as though this is a changing proportion. When the RBNZ data starts in April 2021, it was 19%.

In April 2021, almost half of all new mortgages went on a one year fixed rate. Back then the average bank rate was 2.25%. The popularity of the one year fixed term fell from there but by April 2023 it is still taken up by 30% of borrowers. The average bank rate rose to 6.65%. And this is when the average three year rate is lower at 6.35%.

However, the really big movers have been the rise in popularity of the two year rate, from about 13% of all loans then to about a quarter now. The 18 month term rose from 2% then to 18% now. Giving up share has been the longer rates. The volumes in the four and five year fixed terms has never been material, but the three year fixed term garnered 10% in April 2021, and held that for some time, even rising slightly. But recently it has dropped in popularity with a thud, now down to under 5% in April 2023.

Currently, the Co-operative Bank has the most competitive six month fixed rate.

(Update: Earlier versions listed the lowest rates incorrectly. This version is now corrected.)

For one to three years fixed it is now Heartland Bank that has the lowest rates on offer.

Few people take out four and five year fixed rates so these comparisons make little impact, but for the record it is ICBC and Westpac with the current lowest.

For the popular one year fixed rate you give up only six basis points (bps) by taking a Kiwibank carded offer, but almost 50 bps by taking the ASB carded offer.

For the increasingly popular 18 month fixed offers, the lowest is 30 bps from the best main bank carded rate.

For two years fixed, going with the 'best' main banks, ANZ and BNZ, will mean their carded rates are 29 bps higher than Heartland Bank.

Obviously you should negotiate and shop around. Most banks will discount their carded rates if you have strong financials. You shouldn't need them but if you are uncomfortable negotiating, a broker can often be helpful. But be aware some brokers won't offer you the best over the whole market, only the banks they have approved connections to in their "lending panel". And clearly bank mobile managers are there to pitch their company's product.

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 June 16, 2023	%	%	%	%	%	%	%
ANZ	6.99	6.99	6.75	6.49	6.29	7.19	7.09
	7.09	7.05	6.75	6.59	6.49	6.39	6.29
	6.99	6.99	6.75 +0.10	6.49	6.29 +0.30	6.29 +0.10	6.29
	6.75	6.65		6.59	6.29	6.29	6.29
	7.09	6.99	6.75 +0.06	6.59 +0.14	6.29 +0.20	6.19 +0.20	5.99
Bank of China		6.59	6.49	6.39	6.29	6.19	6.09
China Construction Bank	6.76	6.70	6.59	6.55	6.40	6.40	6.40
Co-operative Bank [*FHB special]	6.59	6.45*	6.59	6.45	6.29	6.29	6.29
Heartland Bank		6.40 -0.25	6.45 -0.20	6.20 -0.15	5.95 -0.04
HSBC	7.09
ICBC	6.75	6.59	6.49	6.29	6.09	6.09	6.09
	6.99 +0.20	6.99 +0.20	6.84	6.59	6.29	6.59	6.69
	6.99	6.99	6.75	6.49	6.39	6.29	6.29