More banks are falling into line with carded rate cuts to home loans. BNZ is the latest. They have adopted the 2.29% one year fixed rate first claimed by Westpac. But they have also trimmed their two year rate to 2.59% and matching ASB for that term. It is starting to look like trailing banks are going to do the minimum to remain competitive. ASB has also now cut its one year fixed rate, also to 2.29%. Kiwibank have announced their one year fixed rate will reduce to 2.35% on Monday, January 25, 2021. Carded rate changes are one thing, but on the front lines, most banks will match the market lows of their main rivals if you ask them (provided your financials are attractive enough). Currently, the lowest one year rate is from Heartland Bank at 1.99%. The lowest 18 month rate is from HSBC at 2.25%. The lowest 2 year rate is from Heartland Bank and HSBC at 2.35% and TSB's 2.49% also undercuts the main bank levels. If banks use that funding line, they can still keep their margins intact with rates down to about 2%. Remember, the RBNZ's Funding for Lending program is in place, allowing banks to access money at the OCR's 0.25%. Only one bank has drawn $1 bln in the FLP line late so far, doing so late last year. $1 bln is enough to fund about 2000 home loans. In today's move, BNZ did not change any of its term deposit offers at the same time. Chaston, D. (2021, January 22). BNZ CUTS MORTGAGE RATES NOW TOO, QUICKLY FOLLOWED BY ASB. Interest.Co.Nz. https://www.interest.co.nz/personal-finance/108714/more-big-banks-slip-line-lower-one-year-fixed-rate-home-loan-offers-bnz
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The number of houses sold nationally in December was up +42% from the same month in 2019, reaching 8935 in the month. But the REINZ claims there was a "lack of choice" in real estate markets nationwide at the end of 2020, resulting in sharply rising prices. Nationally, prices were up +19.3% compared to the same month a year ago, but the median price was up +$4000 to $749,000 from November to December, only a +0.5% rise. (REINZ revised down their November median price from the $749,000 they reported last month.) In Auckland, 3219 houses were sold in December, up from just 1932 in the 2019 equivalent month. Additionally, Auckland’s median house price increased by +17.4% from $886,000 at the same time last year to $1,040,000 a new record high, and the fifth consecutive month where Auckland has seen a new record median house price. Auckland central city area remains New Zealand’s most expensive district in the country with December seeing these suburbs reach a new record median house price of $1,280,000 – hovering extremely close to the $1.3 million mark. Not far behind, was North Shore on $1,235,000 and Rodney district on $1,005,000 showing how unaffordable the Auckland region is becoming – especially for first home buyers. The only district in Auckland now with a median under the $800,000 mark is Franklin district with a median of $790,000. New Zealand house prices rose at an average of $332 per day in 2020. They rose at a slower rate in December, gaining a more modest $129 per day during December at the median level. In Auckland, the December gains were +$323 per day, taking the annual daily gain rate to +$422. On a proportional basis, gains were high in many other regional centers too. In total 11 regions saw record median prices during December 2020. In December, the median number of days to sell a property nationally decreased 4 days from 31 to 27 when compared to December 2019, the lowest in 204 months (since December 2003). Across the country, 14 out of 16 regions had a median number of days to sell of less than 30 days which is the highest on record. Only Northland and the West Coast were exceptions. For New Zealand excluding Auckland, the median days to sell decreased by 4 days from 30 to 26. Auckland saw the median number of days to sell a property decrease by 5 days from 34 to 29, the lowest for the month of December in 17 years. Taranaki had the lowest days to sell of all regions at 20 days – down 7 days from the same time last year. This was the lowest days to sell for Taranaki since records began. Additionally, Waikato (24), Bay of Plenty (27) and Manawatu/Wanganui (21) had record low median days to sell. Chaston, D. (2021a, January 15). Demand exceeds supply in housing markets - result is higher prices. Interest.Co.Nz. https://www.interest.co.nz/property/108601/2020-capped-19-rise-house-prices-year-despite-sharp-jump-volumes-sold-prices-were Westpac has launched into 2021 with a sharp cut in a key mortgage rate. They have cut -20 bps from their one year 'special', taking it down to 2.29%. This is the first cut in a fixed rate from any bank since November 6, 2020, nine weeks ago. But it won't be the last. The RBNZ's Funding for Lending program is in place, allowing banks to access money at the OCR's 0.25%. If banks use that funding line, they can still keep their margins intact with rates down to about 2%. One bank has drawn $1 bln in the FLP line late last year. $1 bln is enough to fund about 2000 home loans. Westpac is aiming to capitalise on the housing frenzy underway. “We know property ownership has probably been a hot topic for many Kiwi families over the holiday period, so whether you’re looking to buy your dream home in 2021 or just pay off your mortgage a bit faster, this special rate could help you get there,” a spokesperson says. “Two years ago the same special home loan rate over the same term was 4.15%. It would have cost $1,119 a fortnight to service a $500,000 mortgage over 30 years. Now, the lower interest rate means the same repayment would be $885 a fortnight – a saving of $6084 over a year.” Their new offer is effective today, Monday, January 11, 2021. Westpac's eligibility criteria included a minimum of 20% equity, plus salary credit to a Westpac transaction account, to be issued prior to drawdown date. These special fixed interest rates cannot be used in conjunction with any other Westpac home loan offers or discount packages, including previously negotiated offers, legal fee contributions or the Westpac Choices Home Loan with Airpoints™. These special fixed interest rates do not apply to loans for business or investment purposes. Westpac is also reducing its Bonus Saver by -5 bps to 0.20% pa and the interest on its Notice Saver by -10 bps to 0.40% pa. Given the FLP, it is hard for banks to justify any offer over 0.25% pa. Despite today's sharp cut by Westpac of their home loan rate (the lowest one year rate by any major), it is not the lowest one year fixed rate available. HSPC offers the same term at 2.25%, and Heartland Bank still has a 1.99% fixed offer for one year. Chaston, D. (2021, January 11). WESTPAC LAUNCHES A 2.29% ONE YEAR FIXED HOME LOAN RATE. Interest.Co.Nz. https://www.interest.co.nz/personal-finance/108562/encouraged-rbnz-one-major-bank-offers-229-one-year-fixed-home-loan-rate-it |
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