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Mortgages

Mortgage Rates Daily Commentary
Friday 3 July 2020  Add your comment
TSB makes big rate cuts; Bank profits drop 20%

This morning TSB has made some significant cuts to its home loan lineup. Its 18 month special falls by 30 basis points, and its six-month home loan drops by 40 basis points. See the latest rates here.

With record-low rates and Covid-19 to contend with, bank profits are taking a big hit this year. KPMG's latest report shows profits fell by 20% in the first quarter: [READ ON]

 

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NZ housing boom pales by global comparisons

New Zealand’s isn’t the only housing market that’s booming. According to The Economist magazine, it’s practically a worldwide phenomenon. And the performance of the New Zealand market looks tepid against the international picture.

Wednesday, April 10th 2002, 5:44PM

by Jenny Ruth

The Economist’s newly created house price index shows global house prices rose 5.4% before inflation in 2001 and 3.2% in real terms. But that was dragged down by recession-mired Japan, where house prices fell 3.6% after inflation, and Germany which is still suffering from reunification blues and where house prices fell 0.9% in 2001.

By contrast, house prices in Spain jumped 11.4% after inflation, in Ireland they were up 8.6%, in Britain up 8.5% and the US up 5.6%.

In New Zealand, the Real Estate Institute’s figures show the national house price in December was 4.1% higher before inflation than in December 2000 and it was only 2.3% higher after inflation. Our biggest city, Auckland, fared marginally better with an after inflation increase of 3.95%. Wellington’s post inflation increase was only 0.8%.

OK, so New Zealand’s boom has only gotten a head of steam in the last couple of months. The institute’s February figures show the post inflation national increase was 4.5% from February last year with Auckland’s increase 1.8% and Wellington’s 3.1%.

But The Economist says US house prices jumped 9% in the year ended February, the biggest increase on record. That’s despite the recession and the 11 September terrorist attacks.

International cities have also enjoyed much bigger increases than New Zealand’s. Between 1996 and 2001, Dublin house prices rose nearly 20% a year, London’s rose more than 10% a year and New York’s rose 5% a year.

In February, New Zealand house prices were only 21.1% higher than in February 1996.

The Economist attributes the increases to historically low interest rates. It notes that in previous recessions house prices fell because they were caused by central banks raising interest rates to quell inflation. The current recession was caused by the bursting of the high-tech bubble while inflation stayed low and interest rates went very low as central banks tried to stimulate economic growth.

In the US the Federal Reserve’s key interest rate is currently 1.75%, it’s lowest level in 40 years. Our Reserve Bank’s official cash rate is much higher at 5% and only went as low as 4.75% post 11 September.

The Economist worries about what will happen as interest rates, and mortgage rates, rise. "Lower interest rates do not necessarily justify more borrowing and higher house prices; homebuyers may be suffering from a bout of money illusion," the magazine says.

But it also notes that home affordability, the ratio of house prices to average disposable income, is still below its late 1980s peak in both Britain and the US. In countries such as The Netherlands and Ireland home house prices are at record highs in relation to disposable incomes.

In New Zealand, AMP Banking’s survey shows home affordability here improved substantially last year.

« House price rises comingRates expected to rise this week »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 3.85
ANZ Special - 2.65 2.75 3.35
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 ▼3.19 ▼3.49
SBS Bank Special - 2.79 ▼2.69 ▼2.99
The Co-operative Bank - Owner Occ 4.40 2.79 2.79 3.39
The Co-operative Bank - Standard 4.40 3.29 3.29 3.89
TSB Bank 5.34 3.59 3.49 3.79
TSB Special 4.54 ▼2.65 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.65 2.69 2.79
Median 4.55 3.22 3.22 3.44

Last updated: 3 July 2020 8:15am

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