BNZ ups its floating mortgage rate

BNZ raises its floating mortgage rate in an out-of-cycle shift, as wholesale rates track marginally higher even though the RBNZ hasn't shifted the OCR

Personal Finance / news

BNZ raises its floating mortgage rate in an out-of-cycle shift, as wholesale rates track marginally higher even though the RBNZ hasn't shifted the OCR

2nd Aug 23, 10:25am by David Chaston

In an unusual move, BNZ is raising its floating mortgage rates by +20 basis points (bps) to 8.69%.

That will take them marginally above the 8.64% floating rates in place for ANZ, ASB and Westpac. Kiwibank has a floating rate of 8.50%.

The BNZ move is effective for both existing and new customers from Wednesday, August 16.

It applies to all their floating rate products, their Standard/Fly Buys variable rate loans, their TotalMoney loans, and the MortgageOne and Rapid Repay revolving credit loans.

The banks with the lowest floating rates are now Bank of China with a 'special' floating rate of 7.49%, ICBC with 7.50% and Heartland Bank at 7.75%.

BNZ's move comes after wholesale rates have barely risen after the last OCR rate hike on May 24. The OCR is currently 5.50% and is expected to stay at that level for some time.

Since May 24, the one year swap rate has risen +10 bps (going from 5.74% to 5.84%), and the 90 day bank bill rate has fallen -3 bps (going from 5.69% to 5.66%).

But the bank has also raised additional Tier1 capital via a perpetual preference share issue which cost it 7.30% pa in a $375 mln issue on June 14.

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18 Comments

by Hawkes Bay | 2nd Aug 23, 10:30am 1690929023

On Track for 10% Interest Rates This Year, Guaranteed !

by Dgm | 2nd Aug 23, 11:49am 1690933775

Wonder what those folks that called you a Clown, would be thinking.. ?

Who's turning out to be the clowns?..

by Pragmatist | 2nd Aug 23, 12:39pm 1690936760

Oh, he's still a clown alright.

by Retired-Poppy | 2nd Aug 23, 2:27pm 1690943273

Can someone please hand this man a mirror 🤡!

by Dgm | 2nd Aug 23, 2:25pm 1690943157

Lol, that is hilarious

by Zwifter | 2nd Aug 23, 8:16pm 1690964195

Still a clown until it actually gets to 10% and what exactly is going to 10% ? Fixed ? Floating ? What term ? So vague it irrelevant really.

by Pragmatist | 2nd Aug 23, 10:12pm 1690971164

Bingo.

by rastus1 | 2nd Aug 23, 10:57am 1690930672

At least we can console ourselves the bottom is in and this change will have no impact on the green shoots that I'm smoking.

by lucenera | 2nd Aug 23, 4:22pm 1690950168

ahahahahahahahahahaha

by Chairman Moa | 2nd Aug 23, 11:14am 1690931647

Those green shoots - RBNZ boss is refuelling his lawn mower as we speak!

by Dgm | 2nd Aug 23, 11:44am 1690933446

Hello spruikers, this is not what you have been telling us..

Reality is that rates are rising and will stay there for the foreseeable future

by Blackbeard | 2nd Aug 23, 12:56pm 1690937788

Correct. The crazy thing is, these rate levels are historically low, not high at all. So, yes, they will stay around this mark. Certainly will never drop back down to ridiculous lows again - we all know what that does.

by TronMVP | 2nd Aug 23, 8:28pm 1690964891

OCR will be down to 5% within 18 months and 3% within 5 years. Is that within the timescale that dgm calls the foreseeable future?

by Bluekiwi Prope… | 2nd Aug 23, 1:00pm 1690938006

High interest rates for a few years is great, especially if you have fixed for those years.

Its in response to High Inflation, which over the past 3 years and next year will compound to about a 25% Rise in Inflation.

Higher costs of living, higher rents, higher wages, everything 25% higher, including House Prices which will catch up to the increase in wages and rents.

High Interest Rates are a cost which is a temporary cost.

The 25% Inflation is permanent shift in prices > So debt just got inflated away by 25% - permanently.

If you had 10 Million Dollars in Debt

You just made 2.5 Million !!!!!!!!!!

by Nzdan | 2nd Aug 23, 1:36pm 1690940182

We come off a 5 year fix @ 4.95% in December 2026. By then even if pay rises are 5% p.a. (our household pay rises have been considerably more so far) that's 28% up and something like 12% of the principal gone.

But assuming 5% p.a. rises, an 8% interest rate will be the break even on a % of income basis.

by bw | 2nd Aug 23, 3:04pm 1690945456

"High Interest Rates are a cost which is a temporary cost."

Temporary you reckon? All of us are about to pay a lot more for a lot longer than many expected.

United States' credit rating downgraded...The downgraded credit rating could make it more expensive for the US government to borrow in debt markets.

Oh, and that Debt that's been Inflated away by 25%? Sounds good, as long as the asset(s) that support it haven't fallen in resale value by that amount... or more. No point having $10 million in Debt if the resale vale of what support it is $5 million. eg:

Good Spirits Hospitality has agreed to sell its nine bars, including the Cav and Danny Doolan’s, for $20.7 million and plans to delist from the sharemarket. The hospitality group reported accumulated losses of $41m in its latest accounts.

by Realtor in France | 2nd Aug 23, 4:39pm 1690951155

Debt, Debt predicated upon Debt can only end in bankruptcy no matter how you shuffle the chairs on this financial Titanic. Unfortunately the vast majority are in a self emposed ride on the hamster wheel of debt. Answer, strive to become your own central bank by paying off debt, then hold appreciating assets and maybe pms....or pull the blanket over your head in denial.

by GetFeeling | 3rd Aug 23, 9:47am 1691012875

My read is that BNZ - like other major banks - are doing everything they can to discourage people going floating or short (1y or 18m or 2y). They know that the economy is going to tank the 2nd half of this year and the RBNZ will be forced to make lovin' statements beginning Feb/Mar '24.