ANZ pushes fixed mortgage rates even higher

Personal Finance / analysis

ASB opened the door, and the first to walk through it is ANZ with an even steeper set of fixed home loan rate increases

22nd Aug 23, 7:04pm by David Chaston

ASB is no longer "offering" the highest carded fixed rates in the home loan market.

It seems odd that banks are now 'competing' to raise mortgage rates.

ASB's Monday move up has emboldened another main bank to raise fixed rates with ANZ taking up the challenge. Its increases for fixed terms less than two years are relatively minor, but are up +20 basis points for two years and longer.

To be complete, we should note that they cut their six month fixed rate, but that is a term that has insignificant market share.

ANZ how has the highest carded rates of any bank for all terms of one year and longer, sharing some tenors with ASB.

Banks will [rightly] point out that wholesale swap rates are rising globally. And ANZ has at least raised its offers to term deposit rates significantly for an 18 month term. Details here.

The spring real estate selling season is going to start with home loans costing more, at least from these two main banks, the two with the largest existing market share.

And remember, in contrast, some challenger banks have trimmed rates - recall SBS Bank now offers 5.95% for a three year fixed term.

Obviously you should negotiate and shop around. ANZ and ASB's existing clients who are rolling over may be the most motivated to 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 August 23, 2023	%	%	%	%	%	%	%

ANZ	7.09 -0.10	7.25 +0.06	7.04 +0.15	6.99 +0.20	6.69 +0.20	7.09 +0.20	7.09 +0.20
	7.45	7.25	6.95	6.89	6.69	6.59	6.49
	7.39	7.19	6.95	6.79	6.49	6.49	6.49
	7.15	6.99		6.79	6.49	6.29	6.29
	7.19	7.19	6.95	6.69	6.49	6.29	5.99

Bank of China		6.89	6.79	6.59	6.29	6.19	6.09
China Construction Bank	7.19	7.09	6.89	6.75	6.45	6.40	6.40
Co-operative Bank [*FHB special]	6.99	6.79*	6.89	6.75	6.49	6.49	6.49
Heartland Bank		6.59	6.59	6.45	6.15
HSBC	7.19
ICBC	6.95	6.79	6.65	6.45	6.29	6.29	6.19
	7.19	7.19	6.95	6.74	5.99	6.59	6.69
	6.99	7.19	6.99	6.79	6.49	6.49	6.49

Fixed mortgage rates

Select chart tabs

Source: interest.co.nz

Source:

Daily swap rates

Select chart tabs

Source: NZFMA

Comprehensive Mortgage Calculator

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70 Comments

by nguturoa | 22nd Aug 23, 7:18pm 1692688707

Someone predicted 10% guaranteed this year.

Looks like it will be a reality.

Over priced NZ real estate is going to have a rude awakening.

1. Dairy industry is not going to make as much as predicted.

2. China is going through a debt cycle and our economy highly dependent on that country. All eggs in one basket.

3. Tourists are only trickling slowly as we are an expensive destination at the bum end of the world.

4. We only invest in one thing, real estate and buy from each other at every increasing prices so offshore owned banks can make profits.

God save NZ

by JimboJones | 22nd Aug 23, 7:46pm 1692690362

Miles away from 10% unless you count some obscure bank. ANZ the highest major at little over 7%.

by sadr001 | 22nd Aug 23, 11:18pm 1692703124

Those are the special rates. Standard rates are about 2% higher and for those with 5% equity the low equity margin on top can be another 2%

by General Comment | 23rd Aug 23, 7:39am 1692733182

Genuine question. Can you provide a link to bank sites that show the standard rate as 2.0% above the special rates? As far as I can tell they're all around 0.6% higher. A 2% discount for a special rate would be quite a magnanimous act from a bank.

by Yvil | 23rd Aug 23, 8:35am 1692736534

Genuine answer,: No they can't, it's just a made up number in their mind. You can't reason with children, I tried to before as well, as Te Kooti wisely said, "you're arguing with a sect who refer to scrolls"

by hagris | 23rd Aug 23, 8:51am 1692737513

"Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments

by kiwimm | 23rd Aug 23, 10:22am 1692742961

If you were to take out a variable rate mortgage with low equity margin (>90% lending), you could be paying 10%. Here are the figures for the big 4 (variable rate + low equity margin = total)

ANZ - 8.64% + 2.00% = 10.64%

ASB - 8.69% + 1.30% = 9.99%

BNZ - 8.69% + 1.00% = 9.69%

Westpac - 8.64% + 1.50% = 10.14%

by Yvil | 23rd Aug 23, 10:50am 1692744635

And if you were to go to a second tier lender it would be more than that.

And if you put it on the credit card it's 20%...

Personally, I prefer to choose the lower rate for my mortgage, but I suppose you're free to pick the higher rate to try to make a point.

by kiwimm | 23rd Aug 23, 6:41pm 1692772899

Your comment added nothing to the discussion and put people down. When presented with evidence that you claimed did not exist, you don’t apologise and try to weasel out of it. Time for some self-reflection.

by meh | 23rd Aug 23, 2:38pm 1692758300

And what's the difference from bank economist's referring to their scrolls?

by Nzdan | 23rd Aug 23, 9:26am 1692739584

The best discount I received in 2021 was 0.9% off standard rate. We had a 45% deposit/equity and still borrowing a reasonable sum.

by sadr001 | 23rd Aug 23, 12:23pm 1692750206

8.74% from ASB is 1.74% higher than the 7% mentioned above, rounds to 2% .

https://www.asb.co.nz/home-loans-mortgages/revolving-credit-home-loan.h…

by Pragmatist | 23rd Aug 23, 1:46pm 1692755164

You're a muggins if the majority of your mortgage is on revolving (or you have almost no mortgage left).

Any normal discussion of mortgage rates on this site is referring to fixed term "special" rates from the main banks, not revolving, offset, low-deposit or 2nd tier lenders unless specifically mentioned IMO. Thats the lending that makes up most of the banks residential mortgage lending, and what most people are refixing to when up for renewal.

by K.W. | 23rd Aug 23, 3:39pm 1692761982

What is the difference between special and standard? Who pays the standard rate?

by Sibrit | 23rd Aug 23, 4:13pm 1692764030

The 31,000 loans between January 2020 and October 2021, totaling over $15 billion, that had less than 20% equity?

https://www.stuff.co.nz/business/money/300941816/the-home-loan-borrower…

There could be a lot more.

How many bought between October 2021 and August 2022, and have now seen their equity eroded to less than 20% as prices fell? So long as their bank doesn't revalue they will be fine, but if they are re-fixing, maybe the bank asks what the property is worth now, and if the loan amount is now more than 80% of the property value... Bam... You're on a standard rate with a low equity fee.

by Pragmatist | 23rd Aug 23, 4:30pm 1692765059

Nope, banks have already said they won't reassess LVR for a simple rollover.

by Albert2020 | 23rd Aug 23, 5:05pm 1692767145

Refinancing they will have an issue, not with refixing

by Pragmatist | 23rd Aug 23, 4:26pm 1692764760

Standard = High LVR (aka low deposit)

Special = LVR <80% - ie, the vast bulk of mortgages.

by Frank Sobotka | 23rd Aug 23, 7:47pm 1692776825

Franks a simple kind of man, someone who can love and understand, but isn’t that the wrong way around?

Surely special should be the minority and standard the 80%?

by dubious | 24th Aug 23, 12:21pm 1692836513

No, the vast majority of mortgages have equity in their property greater than 20% of the value of the mortgage (so have an LVR lower than 80%).

by sadr001 | 24th Aug 23, 9:27am 1692826060

Or borrowing at 8.74% to invest in ETF shares with 10.74% averaged returns and need to be able to pay it down quickly / draw again quickly should the occasion arise.

by dubious | 24th Aug 23, 12:19pm 1692836351

The higher you go in LVR, the more substantial the increase.

So eg ANZ charge 0.6% for a "Standard" rate, then they also penalize you with a "Low Equity Premium" on top of the 0.6% for standard rates:

80% – 85% = Premium of 0.25%

85% – 90.00% = Premium of 0.75%

Over 90% = Premium of 2.00%

See pg7 of https://www.anz.co.nz/content/dam/anzconz/documents/rates-fees-agreemen…

by Sibrit | 23rd Aug 23, 2:24pm 1692757468

And BNZ will add another 2% if you default on a repayment. I just don't get it. Lenders seem to punish those that need the most help. Either that, or they are really trying to make a point that poor people shouldn't buy houses. Nowadays, poor applies to over the half the population of New Zealand.

by Peter M | 22nd Aug 23, 8:10pm 1692691837

I believe it is a commentator by the name of "Hawkes Bay" who made those 10% predictions to eventuate with Christmas and I must admit he is getting closer to the truth.

by TronMVP | 22nd Aug 23, 10:25pm 1692699924

I think it was Hawkes Bay. Not sure if he/she could be called a commentator. In any case, he or she has been blocked by this site. Too many references to scrolls and 10%.

by Pragmatist | 23rd Aug 23, 2:31pm 1692757900

Pretty sure he qualified as a common-tater. YMMV.

by boombust00 | 23rd Aug 23, 3:30pm 1692761450

it was indeed. hawks bay

by Frank Sobotka | 23rd Aug 23, 7:48pm 1692776896

#justice4hawkesbay

by Iceman | 22nd Aug 23, 8:29pm 1692692971

10% this year is sounding more and more desperate, please - go have a cry about something else.

by nzphoenix | 22nd Aug 23, 11:07pm 1692702426

I miss him/her

by Smudge02 | 23rd Aug 23, 7:13am 1692731618

National are going to get in and save the market though right???

by Chairman Moa | 23rd Aug 23, 12:03pm 1692749028

Don't count your chicken just yet... There are a chunk of voters under 30 years old, I haven't met one that like Luxton and National.

by Smudge02 | 23rd Aug 23, 1:55pm 1692755709

I’m 50 and to be honest aren’t that impressed myself, but look at the other options!!!

by Pragmatist | 23rd Aug 23, 2:03pm 1692756227

First they have to actually cast a vote, something they have typically been very poor at doing. Then they have to cast it for a party that makes the threshold, so not ALCP, Freedumbs NZ and their ilk. And of those that pass those hurdles, a good portion of them are why greens are polling at 12%, and Labour is not in the teens (yet).

Unless you can arrange for them to get out and vote in a cohesive way like never before their apathy and rebelliousness will not result in a great deviation from existing polling.

by npc | 23rd Aug 23, 3:30pm 1692761427

Polling has National way out ahead of Labour in young people.

by K.W. | 23rd Aug 23, 3:46pm 1692762409

I have. Well, I wouldnt say they "like" Luxton and National, more that there is no way they are voting for Labour/Greens/Maori. Thanks to Covid disrupting their schooling over the last 3 years a lot of these first time voters have now left school and gone straight into jobs/apprenticeships instead of going to University, and as a result, they are not falling for the Leftist ideologies. They have discovered that taxes matter, and being able to afford to move out of home into a rental is the immediate aspiration. So the Nats policy of allowing these kids access to their Kiwisaver for a rental bond is probably bang on the money.

by Whatwillhappen | 23rd Aug 23, 4:36pm 1692765364

We need to clear something up. Labour has an MP with the surname "Luxton". National has an MP with the surname "Luxon". Because no-one listens to me, Jo Luxton did not become the Labour PM when JA stepped down. So we are stuck with Luxon and Chippy

by RickStrauss | 24th Aug 23, 8:28am 1692822504

Haha, how sad if they've been persuaded they should raid their retirement funds to help enrich property speculators further. Great marketing by Nats.

by K.W. | 24th Aug 23, 1:30pm 1692840611

It is. Every 18 year old thinks 65 is SO OLD and that surely they will be dead before ever living that long, so what good is Kiwisaver? LOL.

by General Comment | 23rd Aug 23, 4:39pm 1692765585

Is Christopher Luxton going to be the next elected PM, to join the ranks of Jacinta Adern, John Keys and Helen Clarke? Let's find out...

by pythagoras | 24th Aug 23, 6:39pm 1692859143

Join the ranks how, in becoming a PM whose name is commonly spelled wrong? If so, congrats on a perfect score 4/4.

by Zwifter | 23rd Aug 23, 11:18am 1692746326

So are the numbers in the table above for a 20% deposit ? That's pretty unrealistic these days, we had to scratch around back in the day to even raise the 10%. Rates will not hit 10% regardless. Are the banks even still lending on a 5% deposit ?

by K.W. | 23rd Aug 23, 3:53pm 1692762814

Yes, because the Government is underwriting all the loans for low deposit borrowers.

by M0ralHazard | 23rd Aug 23, 11:38am 1692747496

How do you figure we will have 10% interest rates this year when the rest of you post lists the reasons why the economy is screwed?

by MikeM | 23rd Aug 23, 11:39am 1692747554

Where is your reasoning for 10% rates? That list has no relationship with interest rates whatsoever.

by papa_mahi_nui | 23rd Aug 23, 12:23pm 1692750202

Point 4 is where govt can create the environment for change...

Nats: change interest deductibility and bright line test.

Point 4 situation: no change!

by Averageman | 22nd Aug 23, 9:59pm 1692698366

Globally the cost of debt continues to get hotter, further melting the wings of speculation. As the speculative plunge back to the reality of affordability, how many will incerate.

Rates higher for longer. Crispy popcorn...

by nktokyo | 23rd Aug 23, 6:51am 1692730315

Will Kiwibank take the opportunity to buck the trend?

Nah.

by wortho | 23rd Aug 23, 7:46am 1692733589

So where is our RBNZ in all this? The market is pushing rates up, from global and local bank pressures, yet again, Orr too little too late. Might be a RBNZ Christmas pressie big rise to catch up. Guess he gets his million dollar job and perks from ol Granty boy.

by MediumPangolin | 23rd Aug 23, 8:32am 1692736374

This chart shows the current US Treasury Yield Curve alongside the same from 3 months, and two years ago.

To move past its currently inverted state, which it eventually & inevitably will, one of two things must happen; either the short end will drop, or the long end will rise.

Over the past three months, the short end has remained static, while the long end has risen. While not an indicator of its future state, it does give pause for thought. Is it possible that we end up in a situation where the curves reverts to the shape it had in 2019, with the 2yr rate staying at 5% while the 10yr lifts to 7.5%?

Based solely on the recent trend, this does seem like a possibility. And it it turns out, there's every chance we'll see similar effects on our local mortgage rates as we've seen off the back of this recent lift.

by timbob | 23rd Aug 23, 10:18am 1692742692

Given the strength of the world economy in the face of rising interest rates, and the low unemployment both here and in the states, it looks like economies are more resilient than anyone expected, and even the RBNZ has mentioned the neutral cash rate is looking higher than they calculated. What we might be seeing is a nomalisation of interest rates, and as MediumPangolin says, once we are in recession, the yield curve will un-invert, and its looking like the long end is firming up.

by safeashouses | 23rd Aug 23, 9:17am 1692739069

Heard on radio this morning if trend continues in China and Fonterra keep underperforming that RB will cut interest. Personally think banks are last minute gauging before OCR is cut. Bank's re not your friend

by Zwifter | 23rd Aug 23, 11:20am 1692746424

gouging

by safeashouses | 23rd Aug 23, 11:28am 1692746908

That's the one :)

by M0ralHazard | 23rd Aug 23, 11:48am 1692748085

RIP the NZ Dollar then

by refactornz | 23rd Aug 23, 1:28pm 1692754081

Temporarily

by Sluggy | 23rd Aug 23, 11:51am 1692748278

RBNZ cuts to devalue nzd, imported inflation heads north, 91 breaks the 3.50 a l mark.... think you may have a revolution on your hands. Propping up fontera is not a core RBNZ KPI.

by sparrow | 23rd Aug 23, 11:59am 1692748758

NACT become the government, NZ inc is for sale, overseas investors pile in to buy while the currency is low and it's all on special.

by Advisor | 23rd Aug 23, 12:14pm 1692749676

That'll only widen our current account gap further with foreigners juicing more returns on their NZ investments out of the country each year. Putting oligopolies in foreign hands has not bode well for our country in the past and will be worse ahead with soaring business costs in NZ.

Take Bluebridge ferries for example: the service quality has dropped like a rock since it was acquired by Morgan Stanley in 2021. The new owner is evidently trying to sweat its aged fleets in an attempt to cream more return on assets/equity, not giving a rat's backside about the adverse impact on the communities in lower North and upper South.

by Te Kooti | 23rd Aug 23, 12:35pm 1692750923

Read about Thames Water (and others) in the UK. Asset stripped by Macquarie, no investment in infrastructure and ripping out absurd dividend payments. Thames Water is 80% levered to pay dividends from no debt at all. Macquarie were happy to pay the fines for dumping sewerage in the Thames - a case study in foreign investment in core assets.

by ibas | 23rd Aug 23, 6:31pm 1692772267

I remember New Zealand Rail network and Toll

https://milfordasset.com/insights/government-toll-buy-a-sad-indictment

by fortunr | 24th Aug 23, 1:58pm 1692842298

Ridiculous.

Cutting the OCR now would simply increase inflation and force the RBNZ to increase the OCR to an even higher level.

There is no free lunch. The only result of excessively loose monetary conditions is simply a stricter tightening of monetary conditions later on.

I thought this lesson would have been quite evident by now.

by Te Kooti | 23rd Aug 23, 11:27am 1692746870

Deposit and mortgage rates are becoming indistinguishable, no wonder CBA warned on NZ margins. Today ANZ pay 6% for 18 months and lend at 7% for 18 months, that is a very tight NIM (like for like)

by Sibrit | 23rd Aug 23, 2:38pm 1692758323

Isn't that only if they use deposits to fund lending? I thought most banks fund their lending by borrowing from elsewhere, and is the reason swap rates are so important.

by Pragmatist | 23rd Aug 23, 3:40pm 1692762058

Banks do use deposits to fund lending, but on-call deposits need to attached to a swap contract to avoid exposure to the risk of deposit rates increasing and killing the banks margin on the loan. Term deposits don't need hedging with a swap contract if the term of the TDs matches the term of the fixed rate on the lending.

by dubious | 24th Aug 23, 12:25pm 1692836751

Banks can leverage a deposit into about 10x more debt, so if they are earning a 1% margin on a deposit they can turn it around into a 10% gain on issued debt.

by ChrisOfNoFame | 24th Aug 23, 1:14pm 1692839693

Don't be fooled. The bulk of the loose money has already been locked up in term deposits at rates way below 6%.

The 6% on offer won't attract much more and it'll be a tiny fraction of overall deposits. I'd suggest, being the cynic I am, that this is merely window dressing so they 'appear' to have skinny margins. The reality is that the margins - over the total lending - is way in excess of 1%.

by MikeM | 23rd Aug 23, 11:43am 1692747823

Looking at bank activities versus the downhill trend in the real economy, rolling over the shortest possible term looks like the best strategy.

Falling demand is gradually picking up pace. The banks are helping this along at the moment.

by 1689 Baptist | 24th Aug 23, 5:55am 1692813326

I love how my bank always has the highest mortgage rates at the end of the week. ANZ is not the first off the blocks, but takes the lead before the finish line with a forceful kick of acceleration. It's like watching Jacob Ingebritson in the 1500m.

by ChrisOfNoFame | 24th Aug 23, 1:23pm 1692840218

Change your mortgage provider more often. When you shift from one bank to another you get:

1. rates that are less than the carded rate, sometimes considerably so. It cheap new business for them.

2. cash-back to cover the usual legal & conveyancing fees - usually with some left over.

It's also quite likely that your bank 'suddenly' finds a better rate when they know you're serious about changing. (I know ANZ does this.)

Banking at the retail level isn't much more than a utility service (water, electricity, internet, etc) and they never have to actually deliver anything physical, much like internet service providers don't either. Why we pay so much is con job.