Category Archives: Home Loan Fixed Interest Rates

Movements in Home Loan Fixed Interest Rates

Home Loan Fixed Interest Rates Decline

The ripples of the awful Christchurch earthquake are beginning to be felt in the Home Loan Fixed Interest Rate market.  ANZ and National Bank have cut the majority of their Home Loan Fixed Interest Rates,  with their 1 year fixed rate now sitting at 5.95%.

Our expectation is that the other major banks will follow suit to some extent shortly. And indeed, as i type, Sovereign has also cut their home loan fixed interest rates.

90 Day Bank Bills have also declined to around 2.86% from in the region of 3.18%.  This is telling you that “the market” is expecting a cut in the Official Cash Rate at the next Reserve Bank Announcement on the 10th of March. These 2 indicators are the major influence on your home loan floating interest rate and hence, a decline in this could also be on the cards.

If you have recently purchased a property and have yet to settle the transaction or have a home loan coming off its fixed interest rate in the near future, may we suggest you hold off making an interest rate decision until after the Reserve Bank Announcement.  Everyone’s circumstances are different but waiting may well lead to a clearer understanding of the Reserve Banks approach to handling the economy in response to the crisis.(and possible flow on’s to home loan interest rates)

These recent actions provide one example, highlighted in our last blog, of why we would have been in no hurry to jump lenders for Kiwibanks (or any other Bank’s) recently advertised home loan “special” 1 year fixed interest rate of 6.15%, which lasted for 3 weeks. The Bank has recently commented that the promotion was “extremely successful”.

Successful for whom?

Home Loan Fixed Interest Rates on the Rise

ANZ Bank, the largest lender in the country, by virtue of its ownership of The National Bank, raised home loan fixed interest rates this week. The increases were hefty with 1 year fixed up 0.45% to 5.95%, 18 months fixed up 0.40% to 6.49% and 2 years fixed up 0.44% to 6.99%.

Today the 1 year swap rate is at 3.52% and the 2 year swap rate is at 4.37%.

The 2 year home loan fixed interest rate at 6.99% less the 2 year swap rate of 4.37% leads to a margin of 2.62%. Its from this margin that the bank covers some of its expenses, some of its profits, and reflects the costs of borrowing a proportion of its required funds offshore.

With home loan fixed interest rates on the rise over the past 5 months we have found ourselves making extensive use of fixed interest rate lock agreements.

Get in touch for further information.

ASB raises long dated home loan fixed interest rates

In one week ASB’s 5 year fixed home loan interest rate has gone from 5.95% to 6.50%. This shows the vagaries of making interest rate predictions.

The 5 year swap rate, the cost to the Bank of borrowing funds for 5 years currently sits at 4.10% (the 10 year average by the way is 7%).

A lovely margin of 2.40%. 

This is an example, as confirmed by the recent reporting season in Australia, that the major banks here have been increasing their margins.


Home loan Interest Rates Succumbing

With some economists picking a cut in the official cash rate on the 4th of December of as much as 1%, home loan interest rates have started to come down in anticipation.

Westpac lead the way yesterday with their 6 month fixed interest rate now at 7.65%.

ASB is following tomorrow with a 6 month fixed interest rate of 7.35%.

great news for mortgage holders :-0