For home loan borrowers hoping weak demand and ultra-competitiveness among banks would see banks cutting rates to win market share, Monday's rate hike by ASB will be disappointing.
ASB is following wholesale rates up and raising its fixed rate card for all rates from six months to two years. These increases take them to the highest in the market.
ASB's new one year rate is now 7.25%, up 20 basis points and still the only bank with a one year rate above 7%.
You have to go back to December 2008 to find a higher one year rate from any main bank. Back then rates were falling fast but they weren't inverted like they are today.
ASB's new two year rate is now 6.79% and also up 20 basis points.
ASB is often the first mover higher, signaling to other banks that it is time to raise home loan rates. In this environment, raising rates comes with added market share risks, but they have moved up anyway. Don't be surprised if others follow over the next week.
Wholesale rates have been moving up as the swap rate charts below show. But a 20 basis points hike does seem outsized for the one year term.
ASB's new one year rate is now 36 basis points higher than Kiwibank, 26 basis points higher than its Aussie bank rivals, and 85 basis points higher than Heartland Bank's market-leading rate. (The one to five year inversion is now a substantial 96 basis points).
ASB's new two year rate is now 30 basis points higher than ANZ, 20 basis points higher than BNZ, Kiwibank and Westpac, and 59 basis points higher than Heartland's market-leading rate. (The one to two year inversion is also unusual at 46 basis points, but that isn't dissimilar to the 40/50 basis points at some other banks).
Update I: ASB has increased its term deposit rates at the same time, basically to levels of their main rivals.
Update II: Kiwibank has also raised some rates now too, which are set out in the table below.
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 ownn 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 July 3, 2023 | % | % | % | % | % | % | % |
| ANZ | 6.99 | 6.99 | 6.75 | 6.49 | 6.29 | 7.19 | 7.09 |
 |
7.25 +0.16 |
7.25 +0.20 |
6.95 +0.20 |
6.79 +0.20 |
6.49 | 6.39 | 6.29 |
 |
7.09 | 6.99 | 6.75 | 6.59 | 6.29 | 6.29 | 6.29 |
 |
7.15 +0.16 |
6.89 | 6.59 +0.10 |
6.29 | 6.15 | 6.29 +0.30 |
|
 |
7.09 | 6.99 | 6.75 | 6.59 | 6.29 | 6.19 | 5.99 |
| Bank of China | 6.79 | 6.59 | 6.39 | 6.09 | 6.09 | 6.09 | |
| China Construction Bank | 6.76 | 6.70 | 6.59 | 6.55 | 6.40 | 6.40 | 6.40 |
| Co-operative Bank [*FHB special] | 6.79 | 6.55* | 6.59 | 6.45 | 6.29 | 6.29 | 6.29 |
| Heartland Bank | 6.40 | 6.45 | 6.20 | 5.95 | |||
| HSBC | 7.09 | ||||||
| ICBC | 6.75 | 6.59 | 6.49 | 6.29 | 6.09 | 6.09 | 6.09 |
 |
6.99 | 6.99 | 6.84 | 6.59 | 6.29 | 6.59 | 6.69 |
 |
6.99 | 6.99 | 6.75 | 6.49 | 6.39 | 6.29 | 6.29 |
Fixed mortgage rates
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101 Comments
Yes, very nice chunky TD rises by ASB, especially on the 2 years to 5 years terms. Nice rises of the 5 years swaps too, which means that the markets now predict that rates will stay higher for longer. Good news for the savers indeed, with rates getting closer to the current inflation level. It is just question of a couple of weeks before the other banks will follow suit.
'Still lower than inflation.'
For those who are saving for a deposit on a house it doesn't matter if interest rates on savings are lower than inflation. All that matters is that they are saving MUCH faster than house values can keep up with. The proverbial "turtle" is finally beating the "Hare" in this race (or at least, has been for about a year now)
But The Prophet remains perfectly on track.
Check out the standard rates for standard people from Kiwibank.
https://www.interest.co.nz/borrowing
10% Interest Rates This Year, Guaranteed !
"I may be wrong some times." What????
Housemouse, you would rock up to the Ballinger Belt (the NZRA national rifle target shooting championships) with a shotgun, slag-off all the experts ad nauseam, and loudmouth when by chance one of your pellets actually got anywhere near the target.
Cheers
I see Kiwibank standard rates are already there. Not to mention all the floating rates from the mainstreamers.
https://www.interest.co.nz/borrowing
A bit late to the game Zwifter.
It's a sad day when you have to go to the MSM for an article that says what the standard rate is .
"Kiwibank’s six-month standard rate is 8.15% compared to its 7.15% special rate."
https://www.stuff.co.nz/business/132468635/asb-and-kiwibank-lift-key-fi…
10% Interest Rates This Year, Guaranteed !
So not only are those who fix-short taking the gamble that lower longer rates will occur in 2/3 years time, but it will become a financial calculation for them, along the lines of "Where is my Break-Even point if I pay more for 2/3 years than I could have?". What don't financial markets like? Uncertainty. So why would retail customers like it by not fixing-long, especially if it's cheaper at face value to do so, by removing it?
None of us know 'what's going to happen' but a quick watch of the TV shows that the risk is a lot higher that something nasty is going to happen, than not.
That's what I'm picking. All these "highest since 2008" mentions seem ominous to me. I feel like the only question is "when?" something goes wrong. It could be later this year. or it could be in another two, but these higher interest rates are going to break something and then they are going to pull out the old playbook again and drop the interest rates back down.
Remember these sorts of catastrophe headlines weigh on the countries psyche and will have at least some influence, especially when repeated over a period of time. This in turn will cause people to be more risk averse and save more which in turn will prevent further increases in inflation or start the decline if significant enough.
For those I know who were head in the sand late last year, all have buckled the purse strings down now after doing some simple math around costs. Most aren't talking the doom and gloom, it is now turning to how can we live a good life n the cheap. Pot lucks, hikes, camping trips planning for summer, and more and more people asking me how to homebrew to save paying IRD any more tax than they already are.
The modelling is similar to how big telcos operate. There is a point where raising prices on existing customers is more profitable than maintaining or cutting prices to attract new customers. This is because of the inertia effect (customers simply dont move providers). With the banks, customers are now locked in to their current bank because they no longer meet the new servicing requirements to refinance elsewhere, and now have a lower LVR to boot. So it makes sense for banks to exploit their current customer base with higher prices, than to try and attract a small number of new customers. Forcing them into longer terms as well is good for business, so they cant refinance later should interest rates drop.
ANOTHER punch in the Gnuts for Tone the Comb. His calls have been total RUBBISH!!
His (+ AC and the entire Onespoof Cabal) incessant talk OF "BOTTOM is in", Buy now, Beee quick.
BAD, bad, bad, advice. Where is the FMA,?? Regulators ????
This "bottom is in" talk actually means a massive mesh sized sieve, where everything falls through and your Gnuts get smashed.
When is Tony hanging up his "independent economist" gig/books and calling it quits. I hear they need bus drivers Tony!
Hindsight has shown the vested were very keen on their interventions to keep it going for as long as they could. I mean, who in their right mind would've predicted the OCR would be dropped all the way down to 0.25? Or LVR removed during the same period? Those with the authority to make said decisions have shown a terrible disdain for the future, and have revealed whatever modelling they used deficient - (from a control theory perspective) having pushed us well into unstable territory, from which we can expect sharp over-correction.
All this could've been avoided by simply keeping house prices inc. land in the CPI.
Interestingly, I found an article from the RBNZ 1988 arguing that because housing was rising so fast in 1987, it should be removed just like the US under Reagan. Oddly, money supply from expanding market caps wasn't examined in the paper - where housing was probably affected by the availability of cash from the expanding cap caused by the share-market bubble and not the other way around like it is now. All in all, was a fairly myopic view from the economists involved. The end result was the recommendation to move to equivalent rent, and classify land as an investment, so that it wouldn't be measured in the control variable!
Not sure why you keep banging on about Tony, I don't even read his stuff and if I really thought it was rubbish I just wouldn't read it. The guys entitled to his opinions and predictions just like everyone else is, ultimately you are responsible for your own financial moves. Personally I think we are pretty much at market bottom as well, depends on what area you live in of course, you only tend to focus only what you can see driving around in terms of sold signs.
Indeed. I used to like his data driven comment was the bubble boomed, but as it deflates, he has lost all credibility. Sampling ticket clippers (agents and brokers) and investors is cleary a group squed by their own bias...."it always goes up young man"...they ain't making anymore" etc.
As such that sample set is hardly "independent".
Yes TA is always sampling the REA toads /Taleb Turkeys and they all tell him: " this guy feeds us every day and we get fatter and happier, he will never stop this gravy train of more more food every day"
Tones and all similar travelers/bank economists are pitifull at their proclamations. Awful at the jobs.
Ran into an old work colleague on the weekend. He promised his wife their major wedding anniversary with a 6-week holiday in south of France and Spain. With the mortgage bite, they have to settle for a 2-week sun of Gold Coast… Reality is biting hard! We had a nice lunch anyway !
Finally a rate over 7%, although anyone can get a rates starting with a 6 with a bit of negotiation. Who remembers the clown 🤡 who "guaranteed" 7% by the end of last year. I think he used to say 10% guaranteed in 2023 😂. It just goes to show how some people have no clue!
So Yvil how does this comment of yours from last year fit into your comment today ??????????????????????????
by Yvil | 15th Nov 22, 4:43pm
Well you did very well predicting 7% interest rates by December 2022, when most of us, me included, didn't believe it, so well done on this prediction!
I have noticed how unstable and rattled you have become. But this continual manipulation to control the narrative is unacceptable .
The Prophet said 7% Interest Rates This Year, Guaranteed ! (2022) - Prophecy Confirmed.
10% Interest Rates This Year, Guaranteed ! (2023) To Be Confirmed.
It is important for us to watch the Vile meter. Or should I say the Yvil meter ?
Noticing a number of contradictory statements by economists out there
On one hand a number are saying there are green shoots in the housing market as we are in a recession and this will force interest rates down and when that happens housing will bounce back
Then other economists stating that the recession is already over and life will return to normal before we know it - obviously of this is the case then there will be no reduction in interest rates and no housing bounce back.
I'm not going to make any predictions myself, other than to say
1. Interest rates will only fall when inflation enters or gets close to the 1-3% band, anything over 4% and there will be no interest rate reduction.
2. In 2008 interest rates fell from 8.25% to 2.5% - housing prices fell 10% and it took until 2012 for house prices to see any growth - almost 4 years
3. The increase in house prices in 2012 - co-incided with unemployment falling from 6.75% following the GFC to under 6.00%. People only felt certain to buy houses when they felt secure in their employment. Hence any uncertainty in employment across NZ is likely to result in house prices being low for longer.
Historic pay equity for nurses, surely that will be inflationary
https://www.nzdoctor.co.nz/article/undoctored/government-makes-historic…
You don't like the 1 or 2 year rate, fix for 3,4 & 5 year rates... People acting like this increase is putting the nail coffin for borrowers when longer term rates haven't moved. There's options and as mentioned in the article often advertised rates is much higher than the discount you can get if you ask or are upfront offered...
"You have to go back to December 2008 to find a higher one year rate from any main bank. Back then rates were falling fast but they weren't inverted like they are today."
If I am reading your swap rates chart right, you have to go back to November 2008 to see them this high - at a time when one year rates were north of 8%. That tells me we have some room to still move upwards? (on TD and Home Loans)
You really do need to stop lying to everyone Yvil.
article from November last year.
https://www.interest.co.nz/personal-finance/118562/anz-first-bank-raise…
Oligopolies in action.
ASB has just gone through financial year end and is looking at a hard to achieve plan for 2024. It needs to try and manage its historically high NII margin and the risk is falling wholesale rates. All banks took big margins on savings accounts on the way that they have to give up on the way down.
To hit the profit numbers the game now shifts back to trying to milk borrower margins. Of course in a market with low volumes everyone will follow them.
The challenge is in calling it out and with a commerce commission study underway does the industry really need to be showing oligopoly behaviour in action!
This is not about the long-end rates. That's a useful distraction. Inflation will be volatile for a while up and down at the long-end untli we are clearly in full recession mode.
What do you reckon the Cost of Funds will be to all lenders refinancing their liabilities books if New Zealand has a Credit Rating downgrade?
Let's be honest, our national accounts are nothing to get too excited about. In fact, given all the unexpected natural calamity that we have witnessed, just the opposite - and getting worse.
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