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Short-term interest rates drop - long-term loans on the up

Major New Zealand mortgage lenders have dropped rates on short-term loans but have raised rates for longer-term lending as inflation pressure slowly starts to build in the local market.

Tuesday, April 27th 2021, 4:34PM 1 Comment

by Matthew Martin

Last week, ASB cut its 1-year rate to 2.25% and its six-month rate to 2.99%. But its rates for three, four and five-year loans went up to 2.89%, 3.19% and 3.39% respectively. AIA's lending rates matched those of ASB's.

Following the ASB rates move Westpac made some similar changes on Friday with its one-year special rate dropping to 2.29%. Westpac's two-year special rate dropped to 2.59% but its three, four and five-year special rates went up to 2.89%, 3.19% and 3.39% respectively.

The BNZ announced yesterday it was removing its unique fixed seven-year 5.20% home loan rate - introduced in 2005 - from the market due to no one taking up the offer since 2018.

Elsewhere, the TSB also cut its one-year rate to 3.05% and its special rate to 2.25% but made no other changes to its long-term rates of between  3.29% and 3.79% and its special rates of between 2.49% and 2.99% for fixed-term loans of up to five years.

Economists nationwide are predicting short-term interest rates to remain steady as inflation climbs toward 2% after a slight rise in the March quarter.

However, as predicted earlier this year, long-term rates are expected to climb slowly due to worldwide economic uncertainty brought about by the Covid-19 pandemic.

On April 14, the Reserve Bank held the official cash rate at 0.25% saying it was prepared to go lower if required.

Reserve Bank governor Adrian Orr said in his Monetary Policy Review the global economic outlook had continued to improve since February.

"However, economic uncertainty remains elevated and divergences in economic growth both within and between countries are significant."

ANZ’s latest Property Focus report also suggests there are tentative signs of cooling in the New Zealand housing market.

“Recent policy announcements represent new downside risks to the housing outlook but at this early stage, it’s difficult to tell if the anecdotes we’re hearing about investors throwing in the towel are representative or not,” the report states.

“Affordability and credit constraints mean the recent pace of house price inflation was never going to be sustainable, but now, with the policy headwind about to start biting harder, we think the slowdown is looming.”

Tags: inflation interest rates mortgages

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Comments from our readers

On 28 April 2021 at 3:19 pm Amused said:
Westpac still haven't notified mortgage brokers officially that they increased some of their fixed home loan rates last Friday.

Says a lot about the value Westpac places in the broker channel when they can’t even be bothered communicating an interest rate change to us.

P.S This also impacts on our clients to make informed decisions.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.25 2.59 2.89
ANZ 4.44 2.85 3.19 3.49
ANZ Special - 2.25 2.59 2.89
ASB Bank 4.45 2.25 2.59 2.89
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - ▼2.25 ▼2.55 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼2.85 ▼3.15 3.39
BNZ - TotalMoney 4.55 - - -
Lender Flt 1yr 2yr 3yr
CFML Loans 4.95 - - -
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 2.95 3.45 -
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.40 3.50 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - 2.25 - -
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 ▼3.40 ▲3.64
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 ▼2.55 ▲2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 2.79 2.99 3.29
SBS Bank Special - 2.29 2.49 2.79
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 ▼2.25 2.59 2.79
The Co-operative Bank - Standard 4.40 ▼2.75 3.09 3.29
TSB Bank 5.34 3.05 3.29 ▲3.59
TSB Special 4.54 2.25 2.49 ▲2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 ▼2.85 3.19 3.49
Westpac - Offset 4.59 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - ▼2.25 2.59 2.89
Median 4.55 2.71 2.99 2.89

Last updated: 6 May 2021 10:51am

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