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Mortgage servicing rate cuts

Several banks have cut their servicing rates recently, with more expected to follow, and advisers believe such changes will mean more for borrowers than low rates do.

Monday, September 2nd 2019, 5:58AM

by Miriam Bell

Historically-low interest rates have been the focus since the Reserve Bank slashed the OCR to 1.0% earlier this month, but the banks’ servicing tests remained tough – limiting access to loans.

Now, that seems to be changing: In the last week, there has been changes in servicing rates from ASB, ANZ and BNZ.

Mortgage Supply Company’s David Windler says that each of these banks’ have reduced their rates from between 0.5% to 0.8%, which is good news for borrowers.

This long overdue easing of credit will lead to increased borrowing capability for all applicants and it also puts the banks’ actual servicing rates more in line with the advertised rates, he says.

“We still have many layers of obligations around not putting people into more debt than they can keep on top of.

“So it is not a change that will put people in a position of vulnerability. It is a reasonable adjustment which is about right, I think.

Windler adds that the slightly looser credit environment along with lower interest rates is likely to mean there will be increased property market activity going forward.

“There’s likely to be more investor activity in particular … Because for people carrying a bit more mortgage debt it could make returns more viable and bring them back into the market.”

For Go2Guys Mortgage Brokers’ Campbell Hastie, this week’s reduction in servicing rates – which he suspects will be followed by more from other banks – are likely to have a bigger impact than the interest rate drops.

That’s because it doesn’t matter how cheap the money on offer is if you can’t get your hands on it and the tighter servicing rates meant it was necessary to jump through hoops to get it, he says.

“These changes make it easier for more borrowers to access some of that cheap money. More people will be able to buy a property. Others will have more scope to buy something just that little bit better.”

Hastie says it’s almost like Adrian Orr has gone to the banks and asked them to open the valve a bit more to get people borrowing and spending.

“This will make the wheels turn and prompt some pick-up in the housing market, although probably not until the new year.”

A big positive of the reduced servicing rates is that every dollar of income now buys a bit more mortgage than before.

Mortgages Online’s Hamish Patel says that, in the banks’ eyes, borrowers effectively have more borrowing ability now.

“Maybe they can borrow another $30k-$60k more than they could last month from their bank for a house purchase.

“So, for advisers, if a client just missed out from getting the right amount approved in the past 12 months they should reassess that client’s situation and try again.”

Tags: Adrian Orr housing market interest rates Lending Mortgage Rates mortgages OCR property investment rates RBNZ Reserve Bank

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 ▼7.65 ▼7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.29 6.59
SBS Bank Special - 7.14 6.69 5.99
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 ▼7.84 7.35 ▼6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - ▼7.24 6.75 ▼6.39
Median 8.64 7.19 7.27 6.65

Last updated: 28 May 2024 11:21am

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