Now all the big four Aussie banks have followed ASB in raising fixed home loan rates.
BNZ is the latest to do so and their increases have been more modest, but it doesn't give them a rate advantage over Westpac for one key term.
BNZ's carded one year rate rose just +10 bps to 7.09% putting that -10 bps lower than ANZ and -16 bps lower than ASB. But it is +10 bps higher than the new Westpac rate for that term and +20 bps higher than the rate still offered by Kiwibank.
At the two year level, BNZ's increase was +16 bps to 6.75%, positioning them lower than ANZ, ASB and Westpac, but above Kiwibank.
But there are significant further savings to be had by considering challenger banks. You can see the rate savings in the table below, and you can work out the amount you will save in your household budget by using the calculator below.
Wholesale rates have been moving up as the swap rate charts below show although there was a hesitation in the moves up yesterday (Monday). But they remain high and are still an upward pressure on bank lending offers.
Given what has been going on in international bond markets, it is hard to see the end of the current pressure from wholesale rates. But a loss of 'steam' or momentum in the giant US economy could bring some relief. We are seeing that reversal in China but as large as it is, it doesn't dominate international money markets like the US. China is still more of a reactive economy, rather than one that leads interest rate trends.
No-one knows which way wholesale interest rates will move from here, although there are plenty of commentator guesses. Some may strike it lucky, but that is the way with guesses. Unfortunately you are on your own about how future rates will pan out; be sceptical about those who claim to 'know' the future. Your guide should be how resilient your financial situation is; be conservative if you have financial stress now. Perhaps locking in what you know you can afford is a safer strategy, over 'hoping' rates will fall in the future. It might be different if you have plenty of headroom in your financials.
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 own product.
One useful way to make sense of the changed home loan rates is to use our full-function mortgage calculator which is 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 11, 2023 | % | % | % | % | % | % | % |
| ANZ | 7.19 | 7.19 | 6.89 | 6.79 | 6.49 | 6.89 | 6.89 |
 |
7.25 | 7.25 | 6.95 | 6.79 | 6.49 | 6.39 | 6.29 |
 |
7.15 +0.06 |
7.09 +0.10 |
6.89 +0.14 |
6.75 +0.16 |
6.49 +0.20 |
6.29 | 6.29 |
 |
7.15 | 6.89 | 6.59 | 6.29 | 6.15 | 6.29 | |
 |
7.09 | 6.99 | 6.89 | 6.79 | 6.49 | 6.29 | 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* | 6.69 +0.10 |
6.59 +0.14 |
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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31 Comments
Like I have been saying all week but ain't nobody listening. The tail is trying to way the dog. Banks move up before the OCR announcement which is tomorrow as a signal that the RBNZ should raise rates but I still firmly believe there will be no rise. The banks are going to do what the banks need to do regardless of the OCR based on lending costs. Interesting times coming. OCR could stay fixed while lending goes to 10%.......someone else here was a bit of a Prophet on that.
" OCR could stay fixed while lending goes to 10%" - and yet Zwifter comments that house prices have bottomed? Its a timely reminder that cheap money created the bubble, its expensive money that deflates it. Owing to lag by way of rates rollovers the deflation process has still a ways to run.
Central banks tried to emulate Japan's cheap money experiment here without considering that Western households (and governments) aren't even remotely as frugal as their Japanese counterparts. Clearly, households and governments are struggling to curb spending even when borrowing costs are being jacked up in such a short span.
Are you reading the articles at all? The wholesale rates (not driven by retail banks) are sharply lifting. That's the most influential driver to fixed rates, not the OCR. Arguably the retail rates should be much higher, given where wholesale rates are (for both home loans and term deposits)
The three-year swap is climbing quickly towards an eye-watering 5.5%. This is a multi-year record level, a level not achieved since the 2008's GFC. The markets are clearly forecasting higher interest rates for longer. The rise in savings and mortgage rates will continue.
5% on a half a million dollars is a lot of money.
It is 35k per year on interest only. And then you need to earn a lot more after taxes to pay that 35k.
Moreover it doesn't change even a cent on the original half a million borrowed. I don't think a lot of borrowers understand how the debt works.
The last time 2 year swap rates (the benchmark funding rate which 2 year fixed rate mortgages are set against) was 5.75% was November 2008. At that time 2 year fixed rate mortgages were around 8.5% but falling rapidly as the GFC set in.
The difference between then and now? Inflation is currently tracking higher so real borrowing rates aren't as bad (assuming your disposable income has adjusted upwards accordingly). However based on the Taylor rule, the RBNZ is still way behind the curve, so further hikes appear warranted.
If you believe the cost of borrowing and availability of credit has been a major driver of house prices over the past 20 years, then, unless inflation falls rapidly, I think the outlook looks grim for many leveraged property investors and homeowners.
by Yvil | 11th Jul 23, 2:13pm
No-one knows which way wholesale interest rates will move from here, although there are plenty of commentator guesses. be sceptical about those who claim to 'know' the future
by Yvil | 11th Jul 23, 2:18pm
What if the commentator "guarantees" the interest rate by years end ? 🤣
What in the Sam Hill is happening here? Champagne lunch?
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