The expected rash of home loan rate cuts by more banks is happening.
On Monday financial markets priced in a full 25 basis points (bps) cut at next week's Reserve Bank (RBNZ) monetary policy review, plus three more by the end of the year. That was a sharp move, pushed along by global risk-aversion pressures.
And local swap rates fell hard too.
Tuesday morning, BNZ took a knife to its longer fixed rates, taking all fixed rates three years and longer to under 6%. For shorter rates, that essentially matches ANZ's recent moves lower.
ASB and Kiwibank have also cut, although not as hard as BNZ.
But none trimmed floating rates like ANZ did. Nor cut its bonus saver rates. And BNZ did not announce any term deposit rate changes this time either, although both Kiwibank and ASB did cut term deposit rates.
Wholesale rates are falling fast now. But with the RBNZ review less than a week away, perhaps the retail bank adjustments will incorporate some hesitation, waiting to get confirmation of the central bank's move on Wednesday, August 14. After that things may settle for a short while.
But the 'settling' may only be relatively brief if the RBNZ's signals bolster the idea that the Official Cash Rate (OCR) could be down at 4.50% by the end of the year. It's at 5.50% now.
Almost all banks will have some flexibility in their rate offers. So the carded rates are just the start. Negotiate. How flexible they may be will depend on the strength of your financials. And don't forget, banks have savvy tools at hand to 'know' the likely valuation of your property, so if the loan-to-value ratio (LVR) is near 80% you may not find them very accommodating for a lower rate. With falling house prices, the point where low equity premiums start applying is shifting around as well. See this.
And 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.
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.
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 Kiwibank changes effective Monday.
| Fixed, below 80% LVR | 6 mths | 1 yr | 18 mth | 2 yrs | 3 yrs | 4 yrs | 5 yrs |
| as at August 6, 2024 | % | % | % | % | % | % | % |
| ANZ | 6.99 | 6.85 | 6.49 | 6.34 | 5.99 | 6.84 | 6.84 |
 |
6.99 | 6.85 | 6.49 -0.20 |
6.25 -0.24 |
5.99 -0.36 |
5.99 -0.30 |
5.99 |
 |
6.99 -0.06 |
6.85 | 6.49 -0.16 |
6.34 -0.15 |
5.99 -0.40 |
5.99 -0.40 |
5.99 -0.40 |
 |
6.99 -0.06 |
6.75 -0.10 |
6.34 -0.15 |
6.09 -0.20 |
6.09 -0.06 |
6.09 -0.06 |
|
 |
7.05 | 6.85 | 6.65 | 6.49 | 6.29 | 6.19 | 5.99 |
| Bank of China | 6.95 -0.10 |
6.79 -0.06 |
6.59 -0.16 |
6.09 -0.40 |
6.09 -0.20 |
6.09 -0.20 |
6.09 -0.20 |
| China Construction Bank | 7.19 | 7.09 | 6.89 | 6.75 | 6.49 | 6.40 | 6.40 |
| Co-operative Bank | 7.05 | 6.79 | 6.69 | 6.49 | 6.35 | 6.35 | 6.35 |
| Heartland Bank | 6.69 | 6.49 | 6.35 | 6.15 | |||
| ICBC | 7.05 | 6.85 | 6.65 | 6.49 | 6.39 | 6.29 | 6.29 |
 |
7.05 | 6.89 | 6.69 | 6.49 | 6.35 | 6.19 | 6.19 |
 |
6.99 | 6.85 | 6.89 | 6.49 | 6.39 | 6.39 | 6.39 |
Fixed mortgage rates
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101 Comments
And if they don't stop falling? Then what? I know! Lower interest rates, again, right? Until New Zealanders are panicked back into buying the only thing they are told that can make them Rich! Property "Investment"
If the RBNZ has any sense, it will wait until that thinking has been clubbed out of the economy. I guess we're about to find out if they realise that.
But "one" can be wildly varying levels of income. Who sets the price, someone earning $70k, or someone earning $250k?
We don't transact huge volumes of houses, so the buyer pool is already heavily biased towards those with more than average means.
This is why DVIs don't really reduce prices. You would need an over abundance of houses on the market, rather than the constrained supply we have.
And why are lenders dropping their interest rates?
Because business; lending, has dried up.
If these developments tell us anything, it's that the RBNZ OCR Rate has a lot less influence on day-to-day business than is generally thought.
Prices are set by the seller, but transactions are made by the buyer.
Swaps, eh. And there are two, or more, sides to every swap. Just like there will be in the Nikkei this morning. And only one side will be proven to be right.
Go and remind yourself of the Swap prices 3 years ago, and have a look at where interest rates are/have been since, and tell me you're going to stake your future on today's prices.
Wonderful, as my 2.89% is up for renewal, this month. Now waiting for the OCR review next week.
Sure, I could have done with another 6 months of this low rate, but I predict interest rates to drop by much more than many expect. Not because it helps me, but simply because hugely debt laden economies cannot function with current interest rates. (I posted this 2 days ago, before the Nikkei meltdown)
2.89% and you didn't sell everything you had, knowing that those rates were bound to attract a buyer with similar access?
So what will you do this time when buyers are tempted back into the market? Do as you should have done last time - sell everything whilst you can, or hold on for the sustainable rise that 'has to happen'.
As you like posting ahead of time, it will be interesting to know. Because your answer is likely to be indicative of wider thinking.
Exactly
Just be careful with buying the prediction that rates WILL drop and stay dropped. There is a lot of smoke and mirrors out there at present.
Remember these gems.. from the not too distant past:
- houses double in value every 10 years
- low interest rates are here to stay
- inflation is only temporary
Nz can't afford for the exchange rate to drop, we have to make sure inflation is well sorted before change, we have to control house prices to attract and retain skilled staff, we cant control the middle east conflict or the Chinese economy. Ai bubble has potential to burst on top of already falling tech stocks... our economy has a lot of issues that actually require a extended downturn to fix
Also there are some interesting events unfolding... Buffet and many others have had a massive stock sell down and are sitting on a pile of cash. I wonder why? The expectations for a significant economic shift are building.
There are now way too many red warning signs and potential problems.. to believe we can fully control the ocr and rates locally over the next 12 to 24 months.
I wouldn't bet on what the ocr will be in 12 months either way. But I wouldn't put a big loan all on a short term rate vs hedging against multiple potential outcomes (unemployment worsening, rate needing to quickly go higher to offset rapidly rising energy prices, another climate event affecting our local food prices ... ).In nz we are really at the mercy of the outside world. And will need to be reactive and rbnz wont not necessarily be able to make decision based on local needs.
I am definitely hedging and being super conservative whilst things play out.
Past share market crashes, 1987, GFC, have not been good for NZ or its housing market. Rates are going to fall but at the same time a deep global recession will wash over us pushing up unemployment.
Spruiker's celebrating a share market collapse because it may somehow accelerate the interest rate drops here then magically stabilise our house prices have no basis in history to come to that conclusion.
A crash in peoples kiwi savers will make the NZ Housing crash even worse.
@IT GUy
Are you immune against job losses or or are your comment just that you really dislike property investors. You would rather will a deep recession and people being worse of just to prove your point against "spruikers" I can assure you no "spruiker" are celebrating a market collapse - everyone is just waiting for a big of interest rate relief - come on mate.
I am not willing anything, I am simply telling you that International Share Market crashes are destructive to NZ house prices.
I do not have a like/dislike emotion thing going here, just dealing with facts.
I have never seen anyone who owns a house celebrate these events, but as you say and I acknowledge rates will fall here. i guess if you where about to loose the house due to interest payments you might welcome this, you would have to be desperate to want this outcome.
Interest.co article 29-July "Rate cuts may not signal a return to the "Happy Days" for the housing market"
by Iceman | 29th Jul 24, 10:45am
Nothing exciting until towards the end of the decade in picking and that’s OK.
Do you think you're getting a little over excited Iceman?
by Iceman | 6th Aug 24, 12:10pm 1722903032 - I don’t know what your obsession with me is mate
No obsession here. Anyway, I see as off late the indisputable evidence that lower interest rates are not leading to higher prices has tempered your rhetoric somewhat. For a while there I thought you were about to get yourself banned!
Justice is often slow.
Drawing parallels with Japan is problematic, but yes illustrative that low interest rates don't automatically make house prices rise.
On the flipside, we know there was significant demand influenced by 3% rates.
So, if rates were say, 2%, is there still enough sentiment there to fuel prices?
Yes - just an example of other factors at play beyond the interest rate.
Would there be demand at 2%? Depends on migration trends. If we have a year of negative migration (which we will get if trends continue), how much sentiment will there be in getting any yield at all. Depends entirely on the type of house you're investing in, but the amount of empty units available for rent and for sale right now is telling. FHB support still a lot lower than todays prices.
Not in this global economy. They are waiting for things to break, then washing up with lower interest rates. Business, jobs, economy, all beginning to fail. Study the GFC, or Japan in the 90s. I wouldn't wager on low interest rates saving further HPI falls any time soon.
@IT Guy - above might be factual however the share marked has not crashed to an alarming level, as yet - the only fact is interest rates coming down - another fact is people with mortgages will be relieved - it will also be good for business and renters. you are willing.......... i don't want to mince my words cause i am tired of "spruikers" getting a nasty wrap here - day in day out. This goes for good or bad times - your opinion is welcome accept when it is directed at a group you deem "spruikers" by your own definition / its note everyone's definition.
keep up
https://edition.cnn.com/2024/08/04/investing/japan-nikkei-stock-rout-in…
Hong Kong/LondonCNN —
Japanese stocks on Monday suffered their biggest daily loss since 1987 as fears about a US economic slowdown sent shock waves through global markets.
The Nikkei 225 index of leading stocks in Tokyo lost a staggering 4,451 points, its biggest point drop in history. On the more common, percentage measure, the index closed more than 12% down — according to Reuters, its largest one-day fall since October 1987. The drop took Nikkei’s losses since early July to 25%, pushing it into bear market territory.
“That was a crash. It smelled like 1987,” Neil Newman, head of strategy at Astris Advisory in Tokyo, told CNN. He was referring to “Black Monday” in October 1987, when global markets plunged and the Nikkei lost 3,836 points.
@IT GUY - I am keeping up mypoint here is that................ your below statement has not come to fruition as yet - and that you clearly demonstrate bad will to what you define as spuikers - you want house prices to crash. - Why?
Rates are going to fall but at the same time a deep global recession will wash over us pushing up unemployment.
Spruiker's celebrating a share market collapse because it may somehow accelerate the interest rate drops here then magically stabilise our house prices have no basis in history to come to that conclusion.
A crash in peoples kiwi savers will make the NZ Housing crash even worse.
@malamah - what am I on about? Its to open a question. and spruiker is to broad a term. if you investing in property diligently paying down debt have cash flow and capital gain - it is good to spruik. not that i have always followed my advice - however a small property portfolio can work.
i am guessing you mean 0.37% and that's std anz practice to offer low cashback to existing customers. they will offer 10k or 0.9% max to new customers. they also won't match other banks cashback if you are an existing customer.
I $8,550 (i.e. 0.9%) on $950k when switching over to them in June
Annoying and good to know thanks. Will complain and say I'm going to switch and see what they say.
Wife and I are both self employed so switching banks means we have to prep financial statements if we don't move around year end. So it's never that cost efficient to do it in the middle of the financial year sadly.
be prepared to move. at the same time i was shopping around a colleague that was anz customer was in a similar position to you with a poor cashback offer for their existing anz loan. another bank offered the standard cashback of <10k <1% and they gave anz a chance to match but they wouldn't budge (and so switched).
Depends upon which frame you chose to look at the issue from. Through the lens of a utilitarian with a longer term view (over the coming decades and not the coming months), I agree with bw.
But that is looking past any selfish personal interest and saying ‘hey if we are going to sort out our private debt problem that is holding back our economy, how do we go about it?’
Instead of saying ‘oh look some people took on too much debt and some people are going to lose their jobs in the short term - we must immediately drop interest rates so we can create more of the problem we already have!’
Dropping rates so we can create more private debt solves nothing and the next global shock will see us back in the exact same position - the only solution is lower private debt relative to GDP which is going to be painful for some whatever way either chose to skin that cat - or that external market forces naturally do for us (markets always find an equilibrium in the long run and we’ve had 20008 - now of fighting against those natural market forces)
Yes but you are making these decisions through what moral lens? It’s possible you have no idea what I’m talking about (there are many ways to view issues such as making financial decisions and having wealth without ethics makes one morally bankrupt - as Jesus said there is no point gaining the world if you lose your own soul - so should we maximise our own wealth while destroying our own society?)
Would appear it is possible that we are moving from the bull trap/return to normal phase of a bubble and more towards the fear phase (after that comes capitulation but in my view that won’t be until the end f the year or early 2025 if this bubble plays out how other historical bubbles have done so).
Drops in NZ house prices could accelerate over the next 6-12 months as interest rates fall - where the bottom could be I have no idea but I’ve always thought a 50% drop in NZ house prices was possible in real terms (but that was before what happened during covid so I have no idea how bad this could get if negative sentiment takes over the market and we head into a very deep recession).
10% interest rates would have caused a massive house price crash in this country and it should be obvious to everyone by now that this would have also completely stuffed our economy. House prices will not be falling while rates decrease, there may be a small lag where a few still go underwater but lets come back at Christmas to take stock, its less than 5 months away. My prediction of 3 to 4% gains down here for the year is still on the table and its now looking a strong possibility.
Do you have a link handy?
Nevermind, found it: https://www.stuff.co.nz/world-news/350368786/watch-monkey-attacks-woman…
Stop it. The spec crowd are fooping their pants and waiting for the inevitable margin call conversations. Bankers are panicking as they have avoided winding up the stupidly leveraged hoping it was all going to blow over. It hasen't and now face a bigger loss in a true market sale.
The non risk taker crowd are just waiting till the stuff really hits the fan to deploy saved capital at a return that actually stacks up.
The kaaaarrrkkk moment is near.
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