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Mortgage rates may be at cycle low: ASB

It is "quite possible" fixed rate mortgages have hit their lowest point in this cycle, according to economists at ASB.

Monday, November 18th 2019, 4:33PM

According to the bank's economists, lenders will consider "balance sheet risk management" over the coming months, as borrowers refix their mortgages. The risk management will put "upward pressure" on wholesale swap rates.

Wholesale swap rates have risen since the Reserve Bank's surprise decision to keep the OCR on hold at 1% last week. 

ASB's latest economic weekly report suggests borrowers enjoyed "a perfect storm" of favourable lending conditions in the run up to last week's MPS.

"The mortgage rate cuts made in October coincided with a bout of global risk aversion that dragged NZ interest rates lower as well as the local market pricing in an OCR low of 0.5%."

The ASB team, led by chief economist Nick Tuffley, predict the OCR will still drop to 0.5%, but say mortgage rates might not fall much further. 

"With the benefit of hindsight we might look back and note that the last few months have provided a perfect storm to the benefit of borrowers. Even if the RBNZ does eventually cut the OCR to 0.5%, as we still assume, term interest rates may not drop back to the levels of last month. At present, our 2-year special mortgage rate of 3.45% looks to be an attractive option for borrowers."

The big four, TSB, and Kiwibank all have a 3.45% two year offer in the market. SBS's 3.39% rate is the cheapest on offer aside from HSBC, ICBC and China Construction Bank.

The Reserve Bank has hinted there may be a high threshold for another OCR cut. On Friday, assistant governor Christian Hawkesby said it would take "something material" to cut the OCR in February.

 

Tags: ASB interest rates Lending Mortgage Rates Nick Tuffley OCR OCR forecasts RBNZ Reserve Bank

« Kiwibank slashes one-year mortgage to new lowBNZ censured over capital failings »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 ▼5.65 ▼5.55 ▼5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 ▼6.39 ▼6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - ▼6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 ▼5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.79 6.49 6.49
TSB Special 7.89 5.99 5.69 5.69
Unity ▼7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.50 ▼6.19 ▼5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.17 5.79 5.69

Last updated: 30 October 2024 9:36am

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