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Mortgage Rates Daily Commentary
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[Opinion] Putting the RBNZ's new capital rules into perspective

There's been a lot written about the Reserve Bank's new capital rules for banks and some of it seems to miss the mark. Here's my take after hearing from the governor yesterday.

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Banks in stand off over home loan increases

Banks are in a stand off at the moment seeing who will blink first and raise their home loan rates.

Wednesday, June 16th 2010, 6:55PM

Last week the Reserve Bank started its tightening cycle and increased the official cash rate by 25 basis points to 2.75%.

Normally floating home loan rates move in lock step with OCR changes, but not this time.

Mortgagerates.co.nz understands the banks are ready to go with increases but no one wants to be first.

They have all seen how much negative press the Australian banks took when they started increasing rates.

At the moment New Zealand banks have a little bit of wiggle room as their margins on short term loans are at historically high levels.

Currently the margins on one year home loan rates are around 160 to 170 basis points. During the height of the mortgage wars several years ago the margin was less than half that at 70 points.

However, while the margin is big at the moment it is slowly being eroded.

The other factor which is playing in banks' favour is that the housing market is weak and there is neither a huge demand for credit, nor is there a lot of competition for home loan business.

These margins have created a complete about face with how banks operate. Previously they competed fiercely for home loan business and made lower margins, and supported that business through the profitability on term deposit lending.

Now the TD market is super competitive, and it is being "subsidised" by the home loan operations.

When rates come expect banks to make changes which will keep them below certain price points; for instance a 5.99% is more likely than something over 6% for a floating rate.

This means the 25 point OCR increase is unlikely to be passed on in full.

 

« Mortgage brokers avoid regulationASB opens the rate hike floodgates »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 ▲4.05 4.49
ANZ Special - 3.55 ▲3.55 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
BNZ - Classic - 3.49 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide ▼5.65 ▼4.75 ▼4.75 -
Credit Union North 6.45 - - -
Credit Union South ▼5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.54 3.54 3.69
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 4.14 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.39 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.39 3.45 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.39 3.45 3.99
Median 5.34 4.04 4.09 4.39

Last updated: 4 December 2019 9:11am

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