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ANZ goes second, cutting retail rates. Both fixed home loan and term deposit rates have been sliced, some by as much as -30 bps. Almost certainly they will be followed by the other major banks, forcing the challenger banks into a tough spot

Personal Finance / analysis
ANZ goes second, cutting retail rates. Both fixed home loan and term deposit rates have been sliced, some by as much as -30 bps. Almost certainly they will be followed by the other major banks, forcing the challenger banks into a tough spot
[updated]

Six days after Westpac moved, and the inflation shifts became clearer, our largest bank has now moved retail rates lower.

But they have gone 'one better' than their rival, setting their carded fixed mortgage rates lower; in fact for terms out to three years, they now have the lowest carded rates in the market.

Although this is good news for borrowers, these moves lower bring bad news for savers.

Equally large reductions also apply to their term deposit rates.

They have cut the popular 6 month term by -15 basis points (bps) to 5.75%. Their nine month rate is down -25 bps to 5.75% too.

For one year, the cut is -20 bps to 5.70%, and for 18 months the cut is -30 bps to 5.60%. More details are here.

Rate offers for terms longer have also suffered large cuts up to -30 bps. But these terms are not popular with savers in the first place so are likely to be ignored.

The recent Reserve Bank (RBNZ) dovish monetary policy review, international rate falls in wholesale rates, and Wednesday's softer Consumers Price Index (CPI) inflation rate have all changed the battlefield landscape to one where the door is open for rate reductions.

But it is a risk. Non-tradable inflation is still very high and not really responding to the RBNZ pressure. That may motivate the central bank to hold its rates for longer at present levels. And if the US Federal Reserve cuts before them, then international demand for higher yielding New Zealand investments may also give the landscape another twist.

Very low housing market activity, and soft commercial loan demand, both mean banks don't need funding lows as strong as they have been

The carded rates we report here can be different to the rates banks might offer in their banking app. We would like readers to reveal what their banking app shows as the potential offer rates. Please add that market intelligence in the comment section below.

A quick check of the wholesale swap rate chart below gives a clear understanding of where funding costs are heading.

Even though the RBNZ has not actually cut official rates yet, the market is doing that "for them". Words and signals matter in financial markets.

In a falling market, the squeeze will go on challenger banks. ANZ and Westpac's move has eliminated much of the rate advantages they thought they had. Then again, some challenger banks now have big advantages for savers - large enough to demand a second look before they too trim their term deposit offers.

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. Break fees will be minimal in a rising market. But they 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. Updated with Cooperative Bank changes.

Fixed, below 80% LVR 6 mths   1 yr   18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
as at July 18, 2024 % % % % % % %
               
ANZ 7.05
-0.20
6.85
-0.29
6.69
-0.20
6.49
-0.30
6.35
-0.30
7.14
-0.20
7.14
-0.20
ASB 7.24 7.14 6.89 6.75 6.39 6.39 6.39
7.24 7.14 6.89 6.79 6.65 6.55 6.55
Kiwibank 7.25 6.99   6.79 6.65 6.55 6.55
Westpac 7.05 6.89 6.79 6.75 6.39 6.39 6.39
               
Bank of China  7.09 6.99 6.75 6.65 6.49 6.39 6.39
China Construction Bank 7.19 7.09 6.89 6.75 6.49 6.40 6.40
Co-operative Bank 7.05
-0.18
6.79
-0.20
6.69
-0.20
6.49
-0.30
6.35
-0.30
6.35
-0.20
6.35
-0.20
Heartland Bank   6.89 6.69 6.55 6.35    
ICBC  7.19 7.05 6.79 6.75 6.59 6.49 6.49
  SBS Bank 7.35 7.14 6.89 6.49 6.35 6.19 6.19
  7.39 6.99 7.19 6.75 6.65 6.59 6.59

Fixed mortgage rates

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Daily swap rates

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Source: NZFMA
Source: NZFMA
Source: NZFMA
Source: NZFMA
Source: NZFMA
Source: NZFMA
Source: NZFMA

Comprehensive Mortgage Calculator

We welcome your comments below. If you are not already registered, please register to comment.

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. Our current comment policy is here.

86 Comments

Ah bugger I just fixed last week

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4

It still intrigues me that the 5 yrs is not 5.99% yet. Is there something longer in play here? World uncertainty ? Threats to free(ish) trade? 

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6

A perceptive question. We should all be asking why. Perhaps ComCom should too.

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3

Call your bank tomorrow and find out, quite often it’s still $0 to break initially.

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6

Timing. Thats how the banksters work .

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0

Who cares about these carded rates, anyone can chime in on what they are seeing on their app for 6 mths and 1 yr?

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3

I been offered 6.95 for six months and 6.75 for one year today.

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4

Regarding your avatar/username, "bloodymigrant" sentiment is strong in nz, your username is 9 years old. My parents came here in the 1950s as youngsters and even though there was full employment the racism and anti immigrant stance was in full swing back then too

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4

6.95% for 6 months

6.72% for 1 year

I have 4 weeks to decide so will wait until the last minute as I suspect these rates could fall further.

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4

This is great news for those struggling from interest rate increases. Some light at the end of the tunnel.

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1

What about those with term deposits... the bank never loses, no margin squeeze for those chaps.

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10

What about them. Put it in meme coins 

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5

I opened a 4-year term deposit with ANZ on Monday, but it has not yet been reflected in the system, and I have not been charged. I assume I'll receive a lower interest rate now ;) 

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0

Spare a thought for all the DGMs who were hoping for 10% rates. 🎻

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21

Never gonna happen with inflation at 3.3% (and a big drop to come). OCR only heading one way unless global forces change. 

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4

They’ve all gone back to their depressing lives and wives.

😝

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7

Retiredpoppy … is she calling you again? 

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3

Looks like NZGecko has suddenly gone extinct.

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7

Shame, I loved his raging DGM rhetoric. Oddly he was actively hunting for a rural property to buy... actions speak louder than words

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3

You fellas calling YET ANOTHER Bottom..... hahaha.  You spruikers are laughable.

Your beloved Housing Ponzi, won't see life, at anything above 4% mortgage rates. Doubt we will see mortgage written below 3.9% in many, many years.

I see many recent property sales recently, selling for absolute staggering losses. The Spruikers be weeping tears.

These NZ Housing Market falls, will accelerate into 2025 2026.
Buyers should lowball (2012 -2015 or so market values) or walk away.  Dout be the Housing Horders useful idiot.

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11

This sounds better if you imagine it being spoken by Emperor Palpatine

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14

Thankyou for quite the chuckle 

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4

Or the Pope, head of a faith who are the largest property owner in the world. 😊

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0

And his motivation for these even weirder predictions?? He wants you out of the way so he can get something cheap for himself. Less buyers around means no competition 

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2

Why is that a bad thing. Nothing wrong with wanting something cheap is there?

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1

Buy now sheep, now is your chance.

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1

Yip. 100% price rises and FOMO are just round the corner.

Buy quick. The record breaking number of houses for sale will go quick!!

Global stability is just round the corner too.. so no risks there - pres Trump is back and will solve everything !!

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1

Baa

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0

Ah NZgecko still living in 2023 with another embarrassing take.

Definition of a moron.

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4

Buyers should lowball (2012 -2015 or so market values

for houses to reach 2012 prices they will need  to drop a further 70%. Can't see it happening. Once the current glut is cleared we will know where the floor is. My prediction is it won't go below the July 2023 trough.

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0

I wonder whether the banks are lowering their rates in order to bail out their development loans? The amount of unsold townhouses sitting on the market right now is quite extraordinary. Two developments a street over from me still have unsold units, and they have been on the market since the beginning of the year. Another two developments on the same street are about to complete and join them. If the developer cant sell them they cant repay their bank loans. Then all hell breaks lose in the banking system.

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10

Most people will not pay to break a higher rate, the banks can easily see when the current mortgages they hold are going to roll over, so its easy for them to model what they believe rates will be once these mortgages roll.   The swap rate is well lower and there is going to be a lot of competition on the way down.

I am not so sure that banks have been lending much to developers, I think they have been using secondary finance sources.

I think banks are more worried about late entry investors, and people losing their jobs here.

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2

Secondary sources, correct, but also quite a lot from banks.

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Yes banks are sphincter twitching on their loans made to developers......

These developers are being told to liquidate what they have, even at a small loss.  The banks are nervous and soon as repayments become unreliable, they want their money back.

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3

Exactly.

Elephant in the room.

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3

if this is case then 0.25% will not help, I would expect a few liquidation auctions soon then?

 

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5

This is now a big reversal in direction, will the test rate drop faster than the OCR

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0

Or maybe they are lowering their rates in line with big reductions to swap rates. 

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2

Swap rates have dropped way more than these rate cuts. 

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0

Just give a look at current swap rates and their recent evolution, and you will understand why banks are lowering rates. 

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Its a happening folks. BE QUICK to lock in higher TD rates via other banks 

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7

Yes whilst the main focus on this forum tends to be on the effects on borrowing the other side of the coin is those with savings in the bank that have been enjoying a solid return in recent times… decisions will need to be made on where to turn to chase a better yield- rental properties perhaps?????

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6

Can still fix for 5 years at 5% plus. Probably not much longer.

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1

Yes move it to investment property and get a 3-4 % return.  Rates and insurances are coming down too 😊

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0

BTC would be a smarter way to make your FIAT work for you 

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2

In the old days we used to take FIAT and put it to work to make more money.

Now you just plonk it in something and cross your fingers.

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5

The rate cut RBNZ won't have to do.

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1

Ya think? 

Nope. The RBNZ's incompetency, both through covid and now, is writ large for all to see.

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4

Wow, that's pretty interesting. Who really runs the show here, the Reserve Bank or the commercial banks? Especially interesting considering these major banks are all Australian owned.

I'm not really sure what to make of this. So ANZ & Westpac seem willing to risk profit margins (RBNZ might stay or rise after all even if unlikely) rather than wait til the official announcement. Hard to see this as anything other than them trying to pressure the RBNZ. I wonder what the state of the commercial banks books is? 

This seems like quite a bold move and not one you would make lightly for a number of reasons. 

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2

The RBNZ set the rate of today’s money. When you fix for a term the bank (well really the market) decides where interest rates are heading over that term. Obviously the market has decided that the RBNZ is going to cut sometime soon. 
I doubt floating rates will change until the OCR does. 

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1

Have you not seen what's happened with swap rates recently? Lowest they've been since mid 2022 so there's plenty of margin to play with for banks looking to attract more business.

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6

No I hadn't, thanks for the info. 

 

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Not bold at all. Simply reflecting where the wholesale funding costs (swaps) have gone in recent weeks plus a bit of pricing in the first cut down the line. Banks set fixed term rates almost entirely based on wholesale funding costs not simply the OCR. 

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1

The money markets run the show, as reflected by swap rates. 

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0

ANZ app today

6 months 6.99%
12 months 6.72%
18 months 6.65%
2 years 6.49%

Think none of this will make any difference to the housing market - would need to be at least a 1% drop and we wont get to that for at least a year. In fact 5.99% could be the lowest rate we see in the next 5 years.

 

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2

Wait a few days 

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1

What’s the 3 year please?

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0

ANZ app this evening

6 months 6.95%
12 months 6.72%
18 months 6.65%
2 years 6.49%

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2

What’s the 3 year please?

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0

BNZ was saying 6.4% a couple of days ago for 3 years

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0

6.35%

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0

I wouldn't recommend fixing beyond 2 years. Too much uncertainty in this world we live in. Who knows, we may be in the depths of depression in 2 years time in which case you could snap up a 3.5% rate.

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2

I doubt we will see rates that low

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0

Normally don’t fix that long, but I’ve got 4 more years on 5.99 for one of my properties. Fixed this when the one year rate was 7.39% last year so have saved a ton.

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2

ANZ had a 6.99% 6 month special that started a month ago, the banks already know lower rates are coming. More rate cuts to come, watch the house price recovery start from here.

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4

So Zwifter are you calling June 2024 the (2nd) bottom of this cycle?

Just for the record so we can check in a few months time....

things have moved so fast since yesterdays headlines

https://www.oneroof.co.nz/news/were-sick-of-this-market-sellers-are-giv…

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7

I remember Zwifter calling the bottom August 2023. Despite all the forum noise, we haven't reached that bottom again. Not to say it won't but it's a bit too early to call him out on a wrong call.

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0

What data set was he using to determine "the bottom" do you know.

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1

median house price I believe.  Zwifter?

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0

Surely, and the OCR turning a corner.

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0

I guess the big question is where these are going to settle in the medium to long term. My guess is 5.5 to 6%.

A 1% drop in the rates isn't going to save the property market or the economy. 

 

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6

Haha sure. Also 10% guaranteed right? 

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6

Did I say that?

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5

The long term average for the 1 yr mortgage over the last 30 years is 5.6%. Hopefully we hit the sweet spot at 4.25% TD and 5.25% mortgage. The 3.5% and 7% mortgages cause problems for the economy.

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3

How do u check the rates in your banking app? I only see offers when a term is ending

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2

A lot of prices are still increasing rapidly. Rates and insurance and utilities are still going up a lot. Plus tax cuts will likely be inflationary 

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1

Tax cuts get eaten up by the rates/insurance increases so won’t be inflationary at all. OCR doesn’t affect non-tradeables either

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0

Looking forward to seeing where rates finally land in December 2026 when our 5 year fix is up for renewal.  

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2

Good fix timing! What rate?

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0

4.95%.  Unfortunately missed the 3.xx% rates of earlier in the year, as rates started climbing while we were house hunting.  But still a good middle ground.   

Our previous mortgage was 3.05% fixed for 5 years in March 2021 but we traded up in December 21 and the bank wouldn't grandfather that portion (~$150k).  

 

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1

Well done. That's an excellent rate :-)

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I'm looking at May 2026, coming off a 3.19%. Positioning for a higher rate, of course, but it's been nice to get a few pay rises under my belt in the meantime without having them immediately swallowed by increased mortgage payments.

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1

Agreed, that's my thinking with the long fix.  Been Increasing the repayments at each payrise proportionally, but can always dial back the repayments back inline with our initial 30 year loan term when we go to refix. 

Better the payrises come off the principal than the interest portion in the short term.  

 

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1

Wow! You really did well there :-)

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0

it was enjoyable having high-ish TD returns. Such a pity that this will end soon and that savers will once again be punished for doing something that in theory we should all be doing - saving money.
Instead, the pressure  to find an alternative investment will descend on "savers" once again. Of course, the first alternative investment that comes to mind is real estate.
 

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2

Folk that have savings....dont really ever feel pressure and they certainly wont be lining up to pay top dollar for presently  high risk over valued NZ  RE ... FIRE industry have well and truly cooked their goose, it will take more than a few very minor regulatory tweaks to set the smouldering ruins ablaze .... the 'rockstar' has fallen off the stage... and has been taken to rehab  ....  lol

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