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Mortgages

Mortgage Rates Daily Commentary
Wednesday 12 August 2020  Add your comment
Advisers brace for second lockdown; ASB profits drop 20%; OCR decision later

Mortgage advisers are preparing to run their businesses under lockdown once again as Auckland goes into alert level three at midday: [READ ON]

ASB Bank profits dropped by 20% in the year to June as the effects of the Covid-19 pandemic took hold: [READ ON]

The Reserve Bank will make its latest Monetary Policy Statement and OCR decision later. Keep an eye out at TMM Online.

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Time to fix or stick to floating rates?

Although the traditional response to rising interest rates is for mortgage borrowers to flock to fixed rate loans, that’s not the best move for all but a few, says William Cairns of mortgage banker Cairns Lockie.

Friday, April 19th 2002, 5:28PM

by Jenny Ruth

The few who should be opting for fixed rate mortgages are those with relatively large mortgage payments relative to their income who have the most need for certainty of outgoings, he says.

But everyone else should just forget it and stick to floating rate mortgages.

That’s because now the Reserve Bank has inflation much more under control than it did in the early 1990s, the peak in interest rates will be much lower than previously. In that environment it’s hard to make substantial savings from fixed rate loans and, in fact, most people on fixed rate loans will end up paying more than if they were on floating rates, Cairns says.

The Reserve Bank may well raise its official cash rate another percentage point or so from the current 5.25% level, but it won’t go much higher than that. What’s more, the expected rate rises are already factored in to fixed rate mortgages, he says.

Cairns Lockie is currently offering a 6.8% variable rate home loan and an 8.1% two-year fixed rate loan.

"If you fix for two years, from day one you’re paying 8.1% but it might take six months for the variable rate to go to 8.1%," Cairns says.

And after that, "if you’re on a floating rate and the economy starts to ease (and the central bank does too), you will get the interest rate relief immediately," he says.

There are other drawbacks to fixed rate loans such the penalties you have to pay if you sell your house within the fixed term.

The other day, he had a couple with a joint income of $100,000 and a mortgage of $100,000 asking about fixed rate loans. "What’s the point. They may as well take the risk," Cairns says.

« Reserve Bank raises OCR to 5.25%Real Estate Institute figures »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 5.50 - - -
Lender Flt 1yr 2yr 3yr
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 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
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 ▼3.85 ▼3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.55 2.65 2.79
Kainga Ora 4.43 ▼2.93 ▼3.07 ▼3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.45 2.99 3.35
SBS Bank 4.54 ▼3.05 3.19 ▼3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - ▼2.55 2.69 ▼2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 ▼2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 ▼3.29
TSB Bank 5.34 3.35 3.49 3.79
TSB Special 4.54 2.55 2.69 2.99
Wairarapa Building Society 4.99 3.65 3.69 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.05 3.13 3.12

Last updated: 11 August 2020 8:24am

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