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Clients switching to three-year terms

Mortgage adviser clients are choosing three-year fixed mortgages in anticipation of rising interest rates, according to a new survey. 

Tuesday, July 27th 2021, 9:13AM

by Daniel Dunkley

Economist Tony Alexander's latest survey of the adviser market reveals more clients are moving off shorter terms and into longer fixed home loans. 

According to the report, more than half of advisers (54%) say clients now prefer three year mortgages.

That figure has risen rapidly in recent months. In June, only roughly 30% of people preferred three years, while that number was around 15% in May. 

Alexander said of the findings: "A round of increases in fixed mortgage interest rates has occurred and we have seen a clear shift in people’s term preference as they consider forecasts of rates going upward.

"In February, 73% of mortgage advisers said that buyers preferred the one-year rate. Come April that proportion fell to 39%, last month it was 30%, and this month only 5% of agents rated the one-year term as most preferred.

"In recent months as people have moved away from fixing one-year there has been a firm shift towards the two-year term. But this month that preference has declined slightly. The most preferred term now for borrowers is three years."

Heartland Bank's online mortgage at 2.45% remains the cheapest three year rate in the market, followed by HSBC Premier at 2.69%. SBS Bank offers a 2.79% rate. 

In addition to the mortgage market changes, Alexander's latest study also noted that the pace of investor withdrawal from the market had slowed.

A net 19% of advisers reported seeing fewer investors asking for advice, but that number was lower than the preceding four months.

Tags: Lending mortgage terms mortgages

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 6.35 5.25 5.45 5.99
ANZ 6.34 5.59 6.05 6.29
ANZ Blueprint to Build - - - -
ANZ Special - 4.99 5.45 5.69
ASB Bank 6.35 ▼4.99 5.45 5.69
Avanti Finance 6.65 - - -
Basecorp Finance 7.25 - - -
Bluestone 6.89 - - -
BNZ - Classic - 4.95 5.39 5.69
BNZ - Mortgage One 6.39 - - -
BNZ - Rapid Repay 6.39 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 6.39 5.55 5.99 6.29
BNZ - TotalMoney 6.39 - - -
CFML Loans 7.25 - - -
China Construction Bank - 5.35 5.80 5.99
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 4.89 - -
Co-operative Bank - Owner Occ 6.25 4.99 5.39 ▼5.69
Co-operative Bank - Standard 6.25 5.49 5.89 ▼6.19
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 5.35 5.85 -
Heartland Bank - Online 4.60 ▼4.79 ▼5.15 ▼5.14
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.50 ▼5.50 6.00 -
HSBC Premier 6.34 5.09 5.34 5.59
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 6.00 4.79 5.15 5.69
Kainga Ora 5.85 5.31 5.58 5.97
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 6.00 5.95 6.45 ▼6.59
Kiwibank - Offset 6.00 - - -
Kiwibank Special - 4.95 5.45 ▼5.69
Liberty ▲5.34 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society 6.95 5.55 6.15 -
Pepper Money 5.29 - - -
Resimac 5.59 6.54 6.44 6.98
SBS Bank 6.29 5.39 5.79 5.99
SBS Bank Special - 4.89 5.29 5.49
Select Home Loans 6.89 - - -
TSB Bank 7.05 5.65 6.09 6.39
TSB Special 6.25 4.85 5.29 5.59
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 6.49 5.55 6.15 -
Westforce credit union - Special - 5.35 5.85 -
Lender Flt 1yr 2yr 3yr
Westforce credit union - Standard 5.85 6.05 6.55 -
Westpac 6.39 5.55 6.05 6.29
Westpac - Offset 6.39 - - -
Westpac Special - 4.95 5.45 5.69
Median 6.34 5.33 5.79 5.83

Last updated: 17 August 2022 9:01am

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