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Last Article Uploaded: Tuesday, May 23rd, 9:13PM
Mortgage Rates Daily Commentary
Monday 22 May 2017  Add your comment
No changes, so what's the best rate?

There continues to be very few changes to home loan rates at the moment. What's the best option currently?
Here's what Westpac said in today's economic update: "For borrowers with a deposit of 20% or more, the best value lies in the two-year rate or shorter terms. Three to five-year rates seem high relative to where we think short-term rates are going to go over that time. That said, these rates are most likely to be pressured higher by global market trends, so borrowers who prefer the security of a longer term still have a chance to lock in at historically quite low levels."

Here is the two-year rates from lowest to highest.

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The time is near for capped rate loans

Capped rate loans about to come into vogue.

Wednesday, May 23rd 2001, 12:00PM

by Jenny Ruth

If past experience is any guide, about now or very soon WestpacTrust is likely to see a surge in demand for its capped-rate home loan products.

But now is about the worst time to buy them if your aim is to lower the average cost of your mortgage over time, according to WestpacTrust home loans product manager David Cunningham.

"Our experience is that caps are most popular at the bottom of the cycle. Customers tend to fix loans at the very top and float at the very bottom," he says.

Instead, he reckons they should be doing the opposite.

Late last year, ''before the (central) bank started easing, we were writing lots of fixed-rate loans. That’s the ideal time for a cap," he says.

Buying a capped product in a rising interest rate environment and preferably at or near the top of the cycle protects the customer from further rises but also allows them to reap the benefits if interest rates fall, Cunningham says.

Taking out a fixed-rate loan in that environment commits the customer to paying near top of cycle rates.

When interest rates are falling, and when it looks like they won’t fall much further, taking out a capped loan will still protect you from rising interest rates but it will cost the customer more than taking out a fixed-rate loan.

WestpacTrust and its predecessors, Westpac and Trust Bank, are the only banks to consistently offer capped home loans.

Spokesman Peter Thornbury says capped loans make up less than 10% of WestpacTrust’s mortgage portfolio but the bank has stuck with them as mainstream products.

The bank offers capped terms for one, two or three years and charges customers 0.5% more than the floating rate at the time the customer caps. An added advantage of capped loans is that, unlike with most fixed-rate loans, customers can make lump sum payments without penalty. They can also switch into a fixed-rate loan without penalty.

For Trish McCarthy, managing director of mortgage broker Mortgage Choice Otago, it’s that flexibility which is the most attractive aspect of capped loans.

"It gives people security and flexibility without the worries of a floating rate," she says.

She agrees fixed-rate loans are probably the best option near the bottom of an interest rate cycle, "as long as you don’t need that extra flexibility."

Nevertheless, McCarthy has noticed that interest in capped loans has gone from negligible to just starting to pick up again.

« Banks rush to cut rates following RB announcementSovereign drops floating rate »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.99 5.35 5.59
ANZ Special - 4.49 4.85 -
ASB Bank 5.80 4.85 5.14 5.49
ASB Bank Special - 4.45 4.74 5.09
BankDirect 5.80 4.85 5.14 5.49
BankDirect Special - 4.45 4.74 5.09
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.59 4.79 5.09
BNZ - Std, FlyBuys 5.90 4.99 5.19 5.49
BNZ - TotalMoney 5.90 - - -
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 6.70 - - -
Credit Union Baywide 5.95 5.10 5.25 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 5.00 5.20 -
Housing NZ Corp 5.79 4.99 5.14 5.49
HSBC Premier 5.79 4.09 4.29 4.89
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.70 4.59 4.69 5.09
Kiwibank 5.70 5.09 5.19 5.65
Kiwibank - Capped - - - -
Kiwibank - Offset 5.70 - - -
Kiwibank Special - 4.69 4.79 5.25
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.00 4.86 4.75 5.30
Lender Flt 1yr 2yr 3yr
SBS Bank 5.79 4.99 5.19 5.49
SBS Bank Special - 4.59 4.79 5.25
Sovereign 5.90 4.85 5.14 5.49
Sovereign Special - 4.45 4.74 5.09
The Co-operative Bank - Owner Occ ▲5.75 4.59 4.85 5.25
The Co-operative Bank - Standard ▲5.75 5.09 5.35 5.75
TSB Bank 5.65 4.80 5.15 5.45
TSB Special - 4.55 4.75 5.15
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.84 4.99 5.29 5.59
Westpac - Capped rates - 5.15 5.25 -
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.84 - - -
Westpac Special - 4.59 4.85 5.09
Median 5.80 4.85 5.14 5.38

Last updated: 19 May 2017 9:26am

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