Kiwibank responds to ANZ's home loan rate cuts with a new market-leading low 6.29% one year fixed rate

SOE Kiwibank has responded to the recent move lower by market leader ANZ in home loan rates, which ANZ did five days ago.

And Kiwibank has made matching cuts to term deposit rates too - just as ANZ did.

Basically, it is matching its main rivals, except it has pushed its carded one year rate offer down to a market-leading low of 6.29%.

These are all changes Kiwibank revealed on its website Tuesday morning.

This comes as wholesale money markets drove down swap rates, which fell rather sharply Monday.

At the same time, another corner of the wholesale financial markets tipped its bets the Reserve Bank would cut rates by -50 bps at its next rate review meeting on October 9, 2024. That is only a guess at this time, but they have now priced in a full 16 bps more than a -25 bps cut. So the betting has shifted to a preponderance for a -50 bps cut.

One year swap rates are now down to 4.19%. It was last at that level two years ago. And back then, the OCR was at 3.0%, although about to rise to 3.5% on an outsized +50 bps shift. So recent history has a 50 bps shift in its records.

Now, the lowest carded rates for each fixed term are:

6 months = Bank of China at 6.80%
1 year = Kiwibank at 6.29%
18 months = Bank of China at 5.95%
2 years = ANZ, Kiwibank and Westpac at 5.79%
3 years = all the main banks and the Cooperative Bank at 5.79%
4 years = BNZ, Kiwibank and Westpac at 5.69%
5 years = ASB, BNZ, Kiwibank and Westpac at 5.69%

Kiwibank has cut all its term deposit rates for terms of nine months and longer at the same time.

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, like now. Don't forget, when you sign up for a fixed rate you are signing a contract. You have been given the right to break it in legislation but the bank has the right to reclaim its costs when you do so. This is NOT evidence of banks making it hard to switch (as some borrowers, and sadly some journalists seem to think).

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 September 17, 2024	%	%	%	%	%	%	%
ANZ	6.85	6.35	5.99	5.79	5.79	6.29	6.29
	6.85	6.45	5.99	5.89	5.79	5.79	5.69
	6.85	6.45	5.99	5.89	5.79	5.69	5.69
	6.85 -0.04	6.29 -0.16		5.79 -0.20	5.79 -0.10	5.69 -0.20	5.69 -0.20
	6.85	6.45	5.99	5.79	5.79	5.69	5.69
Bank of China	6.80	6.45	5.95	5.95	5.85	5.85	5.85
China Construction Bank	6.89	6.45	5.99	5.99	5.89	6.40	6.40
Co-operative Bank	6.89	6.39	6.15	5.89	5.79	5.79	5.79
Heartland Bank		6.69	6.49	6.35	6.15
ICBC	6.89	6.45	5.99	5.99	5.89	5.89	5.89
	6.89	6.59	5.99	5.89	5.89	5.89	5.89
	6.89	6.45	6.65	5.99	5.89	5.89	5.89