Despite the economists at rivals ANZ saying they think the RBNZ will raise the OCR at its review next week, BNZ has pushed through a comprehensive set of fixed home loan reductions today (Thursday).
BNZ's economists don't think there will be an increase. Wholesale market pricing is on the fence, although it sees little chance of a change at next week's OCR review. They are 50/50 by May however - of one +25 bps rise. Market pricing moves around a lot as indications change and it isn't a fixed signal on the future.
BNZ's rate changes range from just -4 bps for the two year fixed rate, to -20 bps for their four and five year fixed rates.
Although the changes are minor in the popular terms, it does position them with one of the lowest rate cards of any main bank.
Carded rates are one thing, but what you will be offered after negotiation is another because loan officers will have some discretion to win new business or hold existing clients.
There was no matching cut to BNZ term deposit rates with today's change.
Wholesale swap rates ticked higher in early February and have stayed up, helped along by the market sentiment that responds largely to the global pressures at play for terms 2 years and longer.
But probably the bigger reason behind this rate cut is competitive forces - we are in the key real estate selling season and activity is stunted with lots of availability and weak sales levels for this part of the season. Mortgage managers will be scrambling for volumes to meet their lending targets.
Obviously you should negotiate and shop around. Most banks will discount their carded home loan 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. They will become important in a falling market however.
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 February 9, 2024 | % | % | % | % | % | % | % |
| ANZ | 7.35 | 7.39 | 7.15 | 6.89 | 6.75 | 7.34 | 7.34 |
 |
7.39 | 7.39 | 7.15 | 6.89 | 6.65 | 6.55 | 6.55 |
 |
7.39 | 7.29 -0.06 |
6.99 -0.16 |
6.85 -0.04 |
6.65 -0.14 |
6.55 -0.20 |
6.55 -0.20 |
 |
7.39 | 7.35 | 6.89 | 6.75 | 6.69 | 6.59 | |
 |
7.39 | 7.29 | 6.95 | 6.89 | 6.65 | 6.59 | 6.39 |
| Bank of China | 7.09 | 6.99 | 6.89 | 6.79 | 6.69 | 6.59 | |
| China Construction Bank | 7.19 | 7.09 | 6.89 | 6.75 | 6.49 | 6.40 | 6.40 |
| Co-operative Bank | 7.39 | 7.35 | 7.15 | 6.89 | 6.75 | 6.75 | 6.75 |
| Heartland Bank | 6.69 | 6.59 | 6.45 | 6.19 | |||
| ICBC | 7.19 | 7.05 | 6.95 | 6.85 | 6.59 | 6.49 | 6.49 |
 |
7.45 | 7.45 | 7.25 | 6.95 | 6.79 | 6.69 | 6.59 |
 |
7.39 | 7.39 | 7.19 | 6.75 | 6.75 | 6.79 | 6.79 |
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72 Comments
Our fixed term expires in July, hopefully the July CPI numbers force the RBNZ to cut, but I am not holding my breath.
Not sure what term we will take if rates remain like this, the 6 month is probably better than the 1 year, but the 6.99% 18 month might be the best option.
re ... "I don’t think rates will be significantly lower by end of 2024"
Where does NZ Inc's GDP factor into that?
If GDP falls or remains sub-par, and business & sales continue to contract, do you really think the RBNZ will be able to continue holding the HFL rhetoric?
Or perhaps you think 0.5% or 0.75% lower by end of 2024 isn't significant?
My guess is that the banks will immediately get real aggressive and while carded rates may not reflect OCR cuts - negotiated rates certainly will.
OCR could hit 7% according to ANZ... scare mongering much?
https://www.stuff.co.nz/money/350185907/anz-7-ocr-possibility
The RBNZ is targeted to reduce inflation... if its persistent domestically (as it seems to be) or the Fed raises then RBNZ will raise the OCR til it drops. They accepted the economy would contract as a result and actually need unemployment to rise.
There is a weird belief that they will drop the OCR to protect DGP/employment/house prices.
Agree.
I thought prices would be flattish this year, perhaps a 2-3% rise. I now think they will fall, perhaps 3-5%.
Having just finished my short story, time to get back to my expose of the media-RE debacle. Got the ideas and structure down, first chapter is titled ‘Smashed Avocados’. Publication early next year could be good timing, if this year pans out (as is likely) to make a mockery *once again* of the views of Gibson, Alexander et al
My advice to a wannabe homeowner is to ...
1) drop any and all ideas of what capital gain you may or may not get after 20 years
2) buy with a focus on only what you need now - drop every other consideration
3) recognise your first home will not be your last (or even remotely close to your 'forever home')
4) Pay down the mortgage as fast as possible by a) taking a 15 year or less mortgage and b) keeping the mortgage small and c) shoveling all spare cash - and interest rate reductions - into capital repayments
5) buy into a walkable area (cars are a terrible 'investment' and running them is only going to get more expensive)
6) don't let 'conventional wisdom' - especially from older people who claim to have made lots from their own houses - cloud your judgement. (CN's done some great posts as to how wrong this conventional wisdom is.)
7) consider all forms of housing - each has pros and cons (and for god's sake don't listen to conventional wisdom here either! the past is not coming back.)
Excellent advice.
I love point 5 - when we moved last year being local (walkable/bikeable) to everything was a key consideration. Climate change isnt being addresses and infrastructure is crap... so we will definitely all pay more to go anywhere.
I would add.....
8) choose something that can create extra income if possible (granny flat/extra bedrooms/rentable whilst on holiday) if things change for you financially. Or you can rent if you move overseas for a bit.
9) seriously consider how you will manage if interest rates go up considerably (there is massive potential for that to happen - wars/black swan events drive energy price rises, inflation thus can really jump from where it is, and the OCR would need also to rise)
10) be careful of budget for local rates - expect up to a 50% rise in the next couple of years. no matter what councils say now.
11) have a plan for if you lose your job or need to retrain (see point 8 above)
... have a well thought through plan and contingencies.
Here’s a list of some famous bubbles that all went pop, including near the times you mention above:
1. Tulip Mania (Netherlands, 1637)
2. South Sea Bubble (UK, 1720)
3. Mississippi Bubble (France, 1719-1720)
4. British Railway Mania (UK, 1840s)
5. Florida Real Estate Bubble (US, 1920s)
6. Dot-Com Bubble (US, 1990s-2000)
7. Japanese Asset Price Bubble (Japan, 1980s)
8. U.S. Savings and Loan Crisis (US, 1980s-1990s)
9. Icelandic Financial Crisis (Iceland, 2008)
10. Subprime Mortgage Crisis (US, 2007-2008)
11. Spanish Property Bubble (Spain, 2008)
12. Irish Property Bubble (Ireland, 2007)
13. Greek Financial Crisis (Greece, 2009)
14. Chinese Stock Market Bubble (China, 2015- ongoing.)
Or do you believe that the NZ property bubble is not a bubble?
And at present we have MPs in power with multi-million dollar conflicts of interest who seem unafraid to try to assist property and benefit their own personal investments. We have billions of rental yield welfare subsidies and price subsidies, and we have just seen a period in which ~$11-12 Billion of taxpayer money was used to stimulate property.
So...never know what NACT might try, to protect their personal property investments and those of their donors.
It hasn't popped NOT because it can't pop. Just because they didn't let it pop. They are being told that the economy will collapse...
We need strong govt and a public bank who can guarantee that people won't lose their home they live in. This way most of them won't be scared and can let overleveraged multi mortgaged Ponzis pop.
If you are a proven reliable customer you should be able to negotiate 0.3-0.5% below the carded 1 year rate. The banks are absolutely creaming it at the 1-2 year carded rates atm. Just compare with the international swap rates, the longer term rates, The equivalent rates offered by smaller banks and even with the current OCR.
Government income tax cuts coming up soon - like the AKL fuel tax cut - likely to be mildly inflationary.
He'll hold to see what comes out of that wash.
Meeting the government's inflation target band is all he has as a means to save his reputation with a now 'hostile' employer :-).
Saving face errs on the side of hawkish.
Don't worry about fixing for longer - if we get a petrol price spike (not unlikely given the global conflicts) - it'll be hikes on.
Just my guess.
Banks squeezing their NIM's (lowering rates whilst swaps are rising), is not a good indicator for house sales volume (not necessarily price). Banks are a leading indicator, as wannabe buyers need to get their finances organised before purchasing a house. To me this sounds like BNZ is not getting enough enquiries for new home loans now, which will result in fewer sales in March. (compared to previous March months)
My first New Year's prediction that the price of bitcoin would peak in January is toast. I did not expect the price of bitcoin to be close to reaching it's former peak.
Likewise the S & P 500 has passed it's 2022 peak. These two indicators tell me that there is more worldwide liquidity available for speculative assets than I thought there was and that the time lag between bank liquidity levels and asset price level change is longer than I have estimated it to be.
Which leads me to conclude that by the end of this year, and now forwards into the first half of next year house price rises will be greater than I had estimated.
We have a govt that is tamping down fiscally, restricting opportunities in the real economy. Which means investors will look to the speculative economy for returns. We have a large pool of liquidity looking for a home that will move out of interest bearing deposits once interest rates start to fall. And we have a RBNZ that is determined to hold the tide back which will build up the dam of liquidity and the force behind it even more.
I think that speculative assets are going to be the winner again. However if the RBNZ rigs it with it's various ratios so that only the wealthiest can benefit from a surge in real estate prices then the peasants will try their luck in more opaque unregulated corners of the financial universe and that will have even worse consequences for the NZ economy than would otherwise have been the case.
Be careful with the financial virtue signaling Mr Orr please. Getting understanding on the fiscal side from this govt is going to be just as difficult as it was with the last one.
My first New Year's prediction that the price of bitcoin would peak in January is toast. I did not expect the price of bitcoin to be close to reaching it's former peak.
Maybe you don't understand the dynamics of the fiat price of Bitcoin. Not sure why Jan would have been the peak price for ratty.
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