Late Monday Westpac made its responding cuts to its fixed rate card.
Now BNZ has chimed in with its version. And Heartland Bank has also announced reductions.
All this means that BNZ has now joined Kiwibank with the lowest carded offer for a six month fixed term.
Kiwibank retains the lowest rate for a one year fixed term.
All main banks are on 5.19% for 18 months. But ICBC offers 4.99% for that term.
4.99% is now almost universal from main banks for a two year term, except Kiwibank.
ANZ and BNZ now have the lowest three year rate.
Westpac has the lowest four and five year rates.
All these lower rates are only possible because term deposit rates are being pushed lower to 'pay' for the home loan drops. Wholesale rates are just not shifting in this same way.
Overall however the key one year rate in the 5.19% to 5.29% range is back to levels we last saw in September 2022.
The reader-reported mortgage rates are less of an advantage now, but please record them if you have them. We need you to record them in the comment section below, which helps us stay on top of this fast-changing corner of the home loan rates market.
And still negotiate. How flexible they may be will depend on the strength of your financials.
One useful way to make sense of the changed home loan rates is to use our full-function mortgage calculator which is below.
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.
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 25, 2025 | % | % | % | % | % | % | % |
| ANZ | 5.89 | 5.29 | 5.19 | 4.99 | 5.29 | 5.99 | 5.99 |
| current reader-reported rates | 5.79 | 5.15 | 5.12 | 4.99 | 5.29 | ||
 |
5.89 | 5.25 | 5.19 | 4.99 | 5.35 | 5.79 | 5.79 |
| current reader-reported rates | 5.85 | 5.25 | 5.15 | 4.99 | 5.29 | 5.69 | 5.69 |
 |
5.79 -0.10 |
5.29 -0.26 |
5.19 -0.20 |
4.99 -0.30 |
5.29 -0.30 |
5.69 | 5.79 |
| current reader-reported rates | 5.69 | 5.24 | 5.12 | 4.99 | |||
 |
5.79 | 5.19 | 5.19 | 5.59 | 5.79 | 5.89 | |
| current reader-reported rates | 5.69 | ||||||
 |
5.89 -0.10 |
5.29 -0.20 |
5.19 -0.10 |
4.99 -0.30 |
5.39 | 5.39 | 5.39 |
| current reader-reported rates | |||||||
| Bank of China | 5.85 | 5.49 | 5.35 | 5.25 | 5.49 | 5.49 | 5.49 |
| China Construction Bank | 5.99 | 5.57 | 5.39 | 5.44 | 5.59 | 6.40 | 6.40 |
| Co-operative Bank (*=FHB only) | 5.89 | 5.39* | 5.49 | 5.49 | 5.69 | 5.79 | 5.79 |
| Heartland Bank | 5.25 -0.24 |
5.19 -0.20 |
5.19 -0.20 |
5.35 -0.10 |
|||
| ICBC | 5.89 | 5.29 | 4.99 | 5.19 | 5.39 | 5.49 | 5.49 |
 |
6.09 | 5.69 | 5.49 | 5.49 | 5.59 | 5.79 | 5.79 |
 |
5.89 | 5.35 | 5.49 | 5.29 | 5.59 | 5.79 | 5.89 |
Fixed mortgage rates
Select chart tabs
Daily swap rates
Select chart tabs
Comprehensive Mortgage Calculator
40 Comments
And with another OCR cut expected only weeks away, we could see 4.75 or even less before Easter.
This isn't how term mortgage rates (1yr+) work. The 25 point cut is already priced into the term mortgages (in fact 28 points is priced), so if the 25 point occurs, all other things being equal, term mortgage rates won't move. What will happen, is that the floating and 6mth rates will drop and if the easings turn out the way they are currently expected, we will end up having a mortgage curve that has a similar rate from 6 mths to 3yrs sitting around the 5% level. Current pricing for the next 4 RBNZ meetings is approximately -28 points, -16 points, -10 points and -7 points, totalling 61 points. This would bring the OCR down to 3.14%. Obviously it will end up being either 3% or 3.25% depending on what happens in the next few months. This is a level where the RBNZ feels that the neutral rate is. If the rate ends up being 3.25%, you would expect that the mortgage curve would sit somewhere between 4.75% and 5.25%. The curve will be positive (i.e. longer terms will be higher than shorter terms) due to the term premium of the swap curve that the banks price off. So in summary, unless expectations for the economy change for the worse, don't expect significantly lower rates than the 4.99% 2 year currently being offered. This rate is ~150 points over the current 2 yr swap rate and the banks don't tend to go much below this.
superb explanation, thank you
I used to make this point. However we just had a 0.5% cut and fixed mortgages went down about 0.5% (I know because I unfortunately fixed a few weeks prior). So that cut, which the RBNZ made clear we were going to get, was not priced in at all!
it was they are just pricing in the next two 25s
Exactly Jimbo, his whole point was disproven a couple of days ago. There will be mortgage wars with 80% of the market coming off fixed rates this year.
The rate cut was fully priced. You should have shopped around. Westpac was offering a three year mortgage at 4.99% from 5 February (prior to the OCR cut). They increased that up to 5.39% on the day of the cut. The banks are now trying to get competitive in the 2 yr maturity, with all of the majors offering 4.99%. This is a margin of 147 bps over the 2 yr swap, with all the (as mentioned previously) rate cuts priced in. As I said, they don't tend to go much below this margin. Previously (last year), they were taking a margin of closer to 200 bps on these swaps, and so what you are seeing now, is just more competition. The important point to note is that the margin is now about as skinny as they go. The smallest I have seen in the last 20 years was 125 bps. Hence as previously said, unless you think that things are going to get worse than the RBNZ predicts currently, term mortgage rates won't fall much from here.
I for one think things will definitely be worse than the RBNZ predicts
I think we'll see sub 4 rates by year end.
What is your logic?
Core inflation continuing to fall. Current rates not stimulatory enough to generate satisfactory growth and employment.
I don’t, but I think mid 4’s is quite likely
RBNZ predict a plateau OCR of 3% by the end of this year, and then going no lower.
The margin between OCR and mortgages rates is around 1.5% (can go as high as 2%, but not much lower than 1.5%) implies a plateau mortgage rate of 4.5%.
The economy would need to be struggling to stimulate inflation and bring the OCR below 3%.
The long term swap rates certainly do not reflect your optimism around sub 4% rates.
ANZ app:
6m: 5.79%
12m: 5.15%
18m: 5.12%
2y: 4.99%
3y: 5.29%
There will be rates starting with 3 in six months time
I really doubt that (unless there is a black swan again)
I doubt that too, I think we might drop to 4.19ish
They are saying they will be making only minor tweaks in the next few reviews.
Banks don't seem to be dropping the full value of the cut as well.
They do off the floating rates, but see above from Stirtrader as how the longer rates work
Fixed mortgage rates are premised on wholesale rates not OCR.
Agree
I did expect a bigger drop considering 50bp off OCR,
Seems like we only dropped 20-25bp at best,
Given the state of the economy I am surprised that 5 year rates arent better.
Why don't banks take a risk and try to lock in mortgages for longer?
5.39 is terrible value
We are a long way away from higher interest rates IMO
Given the state of the economy and extremely unstable international political scenario, it is completely expected that banks won't want to take a risky bet for the 5y rates.
Fixed rates are dependent on wholesale rates and to a lesser extent on marketing. If the wholesale rates for longer terms were lower then the mortgage rates would be lower. Banks are risk adverse - they don't gamble on their shareholders' behalf. If a customer takes out a 5year mortgage, bank borrows that for 5 years at the current rate.
Mortgage interest rates won't fall as far or as fast as people think
It's already fallen alot faster than people had thought 6 or so months ago...
@Epsom I agree, well, I agreed…but recently I have got this lingering doubt that they are going or overcook the way down as well, maybe rates will go lower faster than people think.
From the headline...."new loan growth is quite limited". Combine limited new loan growth with the current high levels of stock and it's hard to assume anything other than flat/declining house prices over the coming months.
lol rearview mirror thinking. Look forward...
ASB- new lending offer 24/2:
6m: 5.85%
1y: 5.25%
18m: 5.15%
2y: 4.99%
3y: 5.29%
4y: 5.69%
5y: 5.69%
There seems to be a general lack of understanding of how this works. The banks have already priced in the next two OCR drops so unless anything changes interest rates won't fall much from here.
They can always cut savings rates, to cut mortgage rates... which they are already are. The banks are keen to lend & increase market share $$$.
Correct, and lack of knowledge re where funding comes from... banks are front running the indicated cuts to win business...
There is no growth growth growth in mortgage new lending compared with the Ponzi's past, hence they are also willing to cut their margin a bit to keep business.
People were saying this three weeks ago about the last OCR cut, yet here we are.
Agree
If it goes under 5 for 5 I'm gonna lock in.Due to refix in late May so might have to float for a bit.
Same here, I have one loan coming off in May 2025 and one in June 2025.
at least we have no energy inflation
Mercury sees average 9.7% power price rise from April
https://www.nzherald.co.nz/business/mercury-sees-average-97-power-price…
4.99% 2 years is now the norm. Wouldn’t surprise me some are getting 4.85% behind the advertised rate.
I got 5 years fixed with ANZ (My existing bank all my adult life) for 5.59% though the App in early January
Question, I have two mortgages my own house and a rental with my brother. Both are up for renewal within a month of each other. Home loan is $250k I have been offered the $3k incentive for this. When the form came thorough to sign under the schedule of loans they added the other loan agreement account?? I have questioned this and awaiting response.
Surely each loan is a seperate negotiation and any cash incentive is offered or not per loan?
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.