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No sense of reality in bank's low rate offers

There is a mix of acceptance and irritation among advisers at a series of cheap mortgage deals done by banks 'on the side.'

Friday, March 3rd 2023, 12:24PM

by Eric Frykberg

One veteran adviser is even forecasting they were a failed experiment that will never come back.

BNZ and ASB have both made special, non-carded one-year rate offers of 4.99% for a year for the adviser channel. The offer is for new customers, subject to LVR rules; they were strictly time-limited.

ASB would not even confirm it had made these offers, saying simply that “home rates are fluid”.

With the OCR at 4.75%, both banks would have been trading at close to, or even below cost, and there has been some speculation about their motives.

Independent economist Tony Alexander thought it was a sales pitch during difficult times, while one adviser speculated that banks were trying to rebalance their lending portfolios to avoid an accidental breach of the LVR rules.

Neither bank is discussing its reasoning.

One adviser thought the method of doing it via advisers, not the general public, made things needlessly complicated for the industry.

“Because it was all done with Chinese whispers, we had heaps of people ringing up and asking about it,” he said.

“A lot of brokers have got themselves into a mess about it too, because they were told that it is not to be marketed. And of course all the nuts who are on social media were putting posts saying, 4.99%..... it was a shambles.”

Squirrel founder, John Bolton said it was advisers, not the banks, who caused the problem to get out of control.

“It was incredibly discreet, it was a below-the-counter offer, and then of course, brokers went out and almost immediately started publishing it all over social media. So it went from being below-the-counter to above-the-counter and it would have been very expensive for the banks.

“We are not going to have this again.”

Bolton said he far preferred transparent pricing over dealing with offers like these.

“The biggest problem is always existing customers. You have tonnes of people saying, 'Why can't I get it?' It was loss-leading, there was no context for it, it did not even meet the cost of funds … it bore no resemblance to reality, and it's given people a false sense of what sort of rates they can get.”

Tags: Mortgage Rates

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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 7.74 7.35 6.99
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 - - -
SBS Bank 8.74 7.74 7.09 6.95
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 7.14 6.49 6.35
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
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 -
Lender Flt 1yr 2yr 3yr
Westpac 8.64 ▼7.49 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - ▼6.89 6.75 6.39
Median 8.64 7.14 6.82 6.65

Last updated: 11 July 2024 1:26pm

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