Heartland signals to clients that it will launch sharp home loan reductions soon, reclaiming a market-leading rate position

After a longish period where the fixed home loan rates offered by the main banks led the mortgage market, the challenger banks are back with their own sharp rates.

The latest is from Heartland Bank. Their unique digital offer is about to burst back into a competitive position.

They have told their clients that they will be sharply reducing their fixed rate offers on Tuesday, October 1, 2024.

They are taking more than -50 basis points off most of their offers. And the result is that they will hold a market-leading rate card with the lowest rates on offer. (That is assuming others don't move lower before Tuesday.)

Heartland Bank's one year fixed rate will be reduced to 6.19%, and that will make it at least -10 bps lower than the best main banks.

For 18 months, Heartland's new 5.89% rate will also have a 10 bps advantage.

The same advantage applies for their two and three year rates. For a three year term, Heartland will share the market-leading claim with the Co-operative Bank.

In the background, wholesale rates are falling, and quite fast. We have more on this here. But what is happening is that wholesale markets are essentially pricing in up to a 50 bps OCR cut when the Reserve Bank reviews the OCR on Wednesday, October 9.

Equally important is what financial markets feel about the prospects of further outsized reductions, not only at the November 27 RBNZ review, but the 2025 ones as well. When those 'feelings' get priced in, wholesale markets move, and bank funding costs do too. Of course, a substantial part of bank funding is not the wholesale markets (although this is where price discovery goes on), but the retail deposit base. Savers will tend to pay for mortgage rate reductions.

So far at least, we have not heard of any changes to Heartland Banks term deposit rate offers.

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. Heartland's rates however are probably not open for negotiation as theirs is an entirely online process.

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.

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. Updated with a recent SBS Bank change.

Fixed, below 80% LVR	6 mths	1 yr	18 mth	2 yrs	3 yrs	4 yrs	5 yrs
as at September 27, 2024	%	%	%	%	%	%	%
ANZ	6.85	6.35	5.99	5.79	5.79	6.29	6.29
	6.85	6.35	5.99	5.79	5.79	5.69	5.69
	6.85	6.29	5.99	5.79	5.79	5.69	5.69
	6.85	6.29		5.79	5.79	5.69	5.69
	6.85	6.29	5.99	5.79	5.79	5.69	5.69
Bank of China	6.75	6.25	5.95	5.75	5.75	5.65	5.65
China Construction Bank	6.89	6.45	5.99	5.99	5.89	6.40	6.40
Co-operative Bank	6.85	6.35	6.09	5.79	5.69	5.69	5.69
Heartland Bank from October 1		6.19 -0.50	5.89 -0.60	5.69 -0.66	5.69 -0.46
ICBC	6.89	6.45	5.99	5.99	5.89	5.89	5.89
	6.85 -0.04	6.45 -0.14	5.99	5.79 -0.10	5.79 -0.10	5.69 -0.20	5.69 -0.20
	6.89	6.45	6.25	5.99	5.89	5.89	5.89