Three more banks have announced fixed home loan interest rate reductions.
But neither has set their new rates at a market-leading level, both playing it safe in the middle of the peloton.
Westpac has cut rates by between -14 basis points and -60 bps, somewhat as a reflection of how far from being competitive they had become.
Westpac is the only one to cut its six month fixed rate in a long time, taking -26 bps off it to 4.99%.
They made no change to their one year 'special' which stays at 4.29% which interestingly is the highest rate of any bank for this term for a 'special'. But they did reduce -30 bps off their standard rate.
They took -36 bps off their eighteen month rate, taking it down to a more reasonable 4.79% but still high compared with its peers.
And they took -14 bps off their two year 'special' with the new rate settling at 4.35%, the same as offered by ANZ.
-36 bps has taken off their three year 'special', taking it down to 4.49% - but not to a market leading level.
Westpac took a hefty -60 bps off their four year standard rate, reducing it to 5.29%, but ASB, Kiwibank, TSB, and HSBC Premier all have lower levels.
However, they weren't the only mover on Friday. BNZ has cut all its Classic home loan rates.
BNZ has reduced its one year Classic rate by -10 bps to 4.19% which matches ANZ and Kiwibank, as well as SBS Bank. But HSBC Premier is still in the market at 3.99% for that term.
For two years fixed, the new BNZ rate is 4.35%, a -14 bps drop to match ANZ and Westpac, but TSB and HSBC Premier have lower rates.
For three years fixed, the new BNZ rate is down by -36 bps to 4.49% and that also just matches Westpac and ANZ. But ASB is lower with the market-leading position.
BNZ has also cut term deposit rates from -5 basis points to -30 bps for terms of 18 months to five years. And they have cut standard rates for four and five years, plus trimming -20 bps off their unique seven year loan, taking it down to 5.95%.
Westpac did not announce term deposit rate cuts today, but their equivalent rates are already low.
Update: ASB also pushed through two reductions on Friday. Their one year 'special' is down by -10 bps to 4.19% and their two year 'special' is down by -14 bps to 4.35%. Again, these changes just match their rivals.
In the past two weeks, wholesale swap rates have not moved much at all and the rate curves have stopped tightening.
See all banks' carded, or advertised, home loan interest rates here.
Here is the full snapshot of the fixed-term rates on offer from the key retail banks.
| below 80% LVR | 6 mths | 1 yr | 18 mth | 2 yrs | 3 yrs | 4 yrs | 5 yrs |
| as at September 12, 2018 | % | % | % | % | % | % | % |
 |
4.99 | 4.19 | 4.85 | 4.35 | 4.49 | 5.55 | 5.69 |
 |
4.95 | 4.19
 |
4.39 | 4.35
 |
4.39 | 4.95 | 5.09 |
 |
5.35 | 4.19
|
5.05 | 4.35
|
4.49
|
5.59
|
5.59
|
 |
4.99 | 4.19 | 4.39 | 4.85 | 5.19 | 5.39 | |
 |
4.99
|
4.29 | 4.79
|
4.35
|
4.49
|
5.29
|
4.99 |
 |
4.80 | 4.24 | 4.45 | 4.49 | 4.85 | 5.39 | 5.59 |
 |
4.85 | 3.99 | 3.99 | 4.19 | 4.69 | 4.99 | 5.29 |
 |
4.99 | 4.19 | 4.49 | 4.49 | 4.85 | 5.39 | 5.55 |
 |
4.85 | 4.24 | 4.29 | 4.29 | 4.49 | 4.95 | 4.99 |
In addition to the above table, BNZ has a fixed seven year rate which has been reduced by -20 bps to 5.95%.
And TSB still has a 10-year fixed rate of 6.20%.
39 Comments
Debt; Money, is little different to many other commodities in reality.
If any product isn't 'selling' and you need the cashflow, then drop the price! Have a Sale etc.
Especially if you foresee the new "Sale" price as being higher than what you will have to drop it to in a Clearance Sale!
If you're asking "Why are banks lowering their rates?" The simple answer is to trying to prevent people from falling in to 'negative equity'.
Haven't you noticed Andrew that our main NZ city areas have been falling in value since we're not being flooded with foreign money anymore.
And that's going to dry up even more in the long term.
Here's a little article from the BBC that helps to explain what has been happening:-
https://www.bbc.com/news/business-45493147
BBC Quote:-
The last 10 years have seen strong growth in Asia and China and that's helped this region weather the storm during the global financial crisis.
For better or for worse, it shifted Asia away from a heavy reliance on the West.
But now with Asia's biggest economy - China - slowing down, the big fear is that another crisis could be brewing.
No-one's quite sure where it would start this time - and how badly we could all be affected.
Yvil have you not worked out yet that 'Negative Equity' is very bad news for banks since it means that people can't renew their mortgages and therefore continue to pay off their loans.
Ultimately this leads to property repossessions (mortgagees) that massively has a negative effect on a banks cash flow.
There is a handy information video in the BBC link I attached.
https://www.bbc.com/news/av/business-45489064/who-was-to-blame-for-the-…
You are making it up as you go along. How about cash flow lends where the bank takes no security? Are they unrenewable? I’ve worked in bad debt consulting. It’s all about whether the payment source is considered impaired. The payment source for most loans is the regular P&I payment not the mortgage security.
Another thing you DGM are ignoring is bank behaviour. It’s no longer the first option to realise security. Laws, publicity and the commission have seen to that.
What are you talking about? Who 'renews' a mortgage. A mortgage is a 20-30 year loan contract. If you mean 're-fix' then current valuation is largely irrelevant to banks, who would be prevented by the CCCFA from a mortgagee sale purely due to value. Sure, it may mean that customers have limited choices when it comes to moving banks, but the scenario you describe is a stretch.
More importantly though, it's unclear on how some (minor) rate changes would make any difference... would the banks be much more inclined to lift interest rates and get a better return so as to provision for losses, if they were genuinely concerned with asset value.
What you're seeing is simple market pricing forces in action. Why does Harvey Norman have a TV sale when Noel Leemings does? Why does K Mart price match? Because that's how market pricing works.
...and to try to improve the quality of the banks back-book. The new lending criteria will mean that only 'good quality' customer will be able to move banks, and so improve the new host banks' book. The problem is, the bank they are leaving will be left with the 'poor' stuff, and their overall profile will drop.
There's going to be a scramble to keep/attract the 'good stuff' and mitigate the potential damage of the lower quality loans, and that means - lower rates, and regardless of whether that's good for cashflow at the individual level, it's a sign 'things aren't good' in the wider economy.... and are going to get worse.
Simple question, (hopefully) simple answer
Demographics. Same thing happened in Ireland, US, Japan(1990) and others. Post demographic events, you see property busts and or interest rate compressions
Deposit rates should go to zero, I get that I say that quite casually but that’s what historical studies imply
"A massive database will share bank customers’ full credit history with each other for the first time from the end of this month..."
If that's the Aussie Banks, Our Banks, then I guess we have that, or will, here? Might moving lenders have another layer of uncertainty added to it now?
Bank A has its own credit ( what they told them to get a loan etc) history for Customer X. If Customer X goes to Bank B to transfer their business, Bank B relies on what Customer X tells them (or not!) about their past dealing with Bank A.
Now Bank A shares its history with Bank B, Bank C and Bank D etc, and so when Customer X goes into Bank B,C or D, to move their business, Banks B,C and D already know what Customer X should tell them. It's more than just what Baycorp etc passes on.
Comes in at the end of this month in Aussie, apparently. So it makes sense it will here?
I remember hearing from a interest only debt stacker that the best way to fool the banks was to have your mortgages in different banks so any one bank couldn't get a handle on your true level of indebtedness. If this happens, some will appear as they truly are - emperor with no clothes. Would be very surprised if it didn't follow suit here, but time will tell.
A reality shift in borrowing is taking place. Just like a casino brings you free drinks and acts like your friend while you have money to play the tables/slots. Of course they treat you the same once you stop spending ...don't they?
Under the terms of your loan agreement, failure to disclose might constitute an event in which the entire loan becomes immediately repayable.
I recall an unconfirmed story that Don Ha breached one of his terms in his lending agreements (don't know which one(s) and this might have caused his loans to become immediately repayable. Perhaps someone on here who knows more can elaborate further.
Insurance companies do this already somewhat, do they not?
A company I worked for some years back, had the credit controllers of all their opposition meet at their office monthly to discuss who was paying and who was not, in their specific industry. Makes sense to me.
Time to buy that positively geared property with upside.
Forget buying a KiwiBuild box with no upside, you would be far better off buying that investment property and staying renting if you are in Auckland.
The sharemarket will get s hiding st some stage but housing will continue to grow in value capital wise and rentwise.
You also have control of the asset with housing
Certainly positively geared properties look very desirable now. Any drop in the interest rate is money straight in your pocket and NZ's interest rates could fall a lot lower. Falling interest rates will make your investment more secure, even increase in value, which is a double bonus.
Do you think he cares about the home loan rates?
Hosking bought a country property in Matakana.
https://www.bayleys.co.nz/1221061
https://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=12…
https://www.stuff.co.nz/life-style/homed/latest/107055255/hosking-and-h…
We were looking to refix $300k with BNZ. BNZ offered to march ASB 3 year rate of 4.39 with another .10 off. We were coming off 4.09 so 4.29 was looking good, but now in laws want us to borrow from them at 3.8% on the condition we make payments of $2k per month (P & I). Sounds like a win win to me. Anyone had experience with this?
Fix for 1 year at 4.19 and up the payments a little to $1000 per fortnight. Your loan will be all paid in 15.7 years. That compares with 17.0 years at $2000 per month with the in-laws' 3.8%.
Use https://www.interest.co.nz/calculators/mortgage-calculator
Bottom line: keep your finances separate from your in-laws. It's not worth the hassle, just to save a few bucks, in case anyone's circumstances change.
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