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Last Article Uploaded: Friday, December 6th, 6:43PM
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Mortgage rates may be at cycle low: ASB

Take note, investors: It is "quite possible" fixed rate mortgages have hit their lowest point in this cycle, according to economists at ASB.

Wednesday, November 20th 2019, 12:05PM

According to the bank's economists, lenders will consider "balance sheet risk management" over the coming months, as borrowers refix their mortgages. The risk management will put "upward pressure" on wholesale swap rates.

Wholesale swap rates have risen since the Reserve Bank's surprise decision to keep the OCR on hold at 1% last week.

ASB's latest economic weekly report suggests borrowers enjoyed "a perfect storm" of favourable lending conditions in the run up to last week's MPS.

"The mortgage rate cuts made in October coincided with a bout of global risk aversion that dragged NZ interest rates lower as well as the local market pricing in an OCR low of 0.5%."

The ASB team, led by chief economist Nick Tuffley, predict the OCR will still drop to 0.5%, but say mortgage rates might not fall much further.

"With the benefit of hindsight we might look back and note that the last few months have provided a perfect storm to the benefit of borrowers. Even if the RBNZ does eventually cut the OCR to 0.5%, as we still assume, term interest rates may not drop back to the levels of last month. At present, our 2-year special mortgage rate of 3.45% looks to be an attractive option for borrowers."

The big four, TSB, and Kiwibank all have a 3.45% two year offer in the market. SBS's 3.39% rate is the cheapest on offer aside from HSBC, ICBC and China Construction Bank.

The Reserve Bank has hinted there may be a high threshold for another OCR cut. On Friday, assistant governor Christian Hawkesby said it would take "something material" to cut the

Tags: ASB housing market interest rates investment Lending Mortgage Rates OCR property investment

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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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