Rate stategy offers variety

If you’re thinking about moving from a floating rate home loan to a fixed one you are not alone. Many home-owners and investors are doing just that at that.

Tuesday, September 4th 2012, 12:00AM

Often the banks will have remarkably similar carded home loan rates. But as our graph of selected lenders from mortgagerates.co.nz shows there is huge variation, particularly when it comes to short-term rates of up to two years.

After that normal transmission resumes and rates are all within cooee of each other.

The most spectacular is not “our” bank, Kiwibank, but SBS. Its 4.99 per cent six month rate is a leader, and way out at the other end its five-year fixed rate smashes the others.

Maybe it’s really focused on buying business? Its quarterly general disclosure statement, out this week, shows it has struggled with new business and blamed the Christchurch earthquake for that.

The problem with this rate is that it is so short-term you will have to make another decision soon and, it’s odds-on, that the rate won’t be half as attractive.

TSB has clearly made a strategy to push customers into a two-year term.

ANZ is most interesting as its carded rates doesn’t look particularly competitive or attractive at the moment. However it has just reported a record quarter. In the three months to June 30 it wrote more than $1 billion worth of home loans. That is a record for the banking sector. Next best was Kiwibank in December 2010 when it wrote more than $800 million in loans.

Although ANZ doesn’t look particularly appealing on rates, it like the others, will negotiate. It is also “buying” business offering cash handouts to customers.

One mortgage adviser managed to get $13,000 in cash and benefits from the bank for his client. Admittedly the loan was more than $1 million, but still it’s a pretty attractive handout.

Westpac doesn’t look particularly flash on the floating rate. But there is a reason for that. It takes the view with pricing here that it will offer a sharp revolving credit rate to encourage customers into that product, rather than a floating rate.

When you look at it is Choices revolving credit loan at 5.60 per cent beats its competitors on the floating term.

One thing this graph shows is there are lots of options for borrowers at the moment. Banks hare taking different pricing strategies and it pays to look around; negotiate and see a mortgage adviser.

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