Not to be outdone, ASB is the next big bank to raise mortgage rates (according to changes to their website this morning).
They won’t be the last with an ongoing global rush to raise policy rates, which is likely to drive up our local wholesale costs significantly later today. Don’t be surprised if BNZ and Kiwibank offer their rambling versions later today or early next week.
ASB has chosen to match ANZ’s new high credentials in all areas.
At this point, the bottom line is that TSB’s current offerings are among the “best” available today.
TSB’s one-year rate is now -69 basis points lower than ANZ, ASB or Westpac. It is -30 basis points lower than Kiwibank.
They also have good benefits for rates from 18 months to three years.
And over four years their advantage over ANZ is a whopping -120 basis points, over five years it’s a -130 basis points advantage.
Compared to ASB, these two longer-term advantages are -44 basis points for each term. Less, but still considerable.
We don’t know how long these large differences last (by us), but they will almost certainly close when the TSB makes its next rate change.
We had wondered if ANZ was being too aggressive with its rate hikes earlier in the week. But the US Fed and the wholesale money markets “justified” their movements which seemed excessive at the time.
It’s easy to see full-curve rates above 6% soon if market momentum continues. Remember, a year ago, one-year fixed rates were at 2.60% at ANZ and two-year rates at 2.99% at ANZ. Two years ago, the two-year rate was 2.69% at ANZ. Borrowers who took out a two-year fixed rate two years ago are facing interest rates on home loans that have more than doubled.
And the trend has not stopped. We will monitor the data to see if there is any urgency to fix longer term to “avoid future pain” and “lock in certainty”. Admittedly, three-year fixed rates are much more popular now.
On the term deposit side, ASB also raised rates and edged above ANZ. ASB’s current six-month offer is 3.45% (ANZ and Kiwibank are at 3.35%), their new nine-month rate is 3.70% (ANZ is at 3.65%, Kiwibank 3.55%) and their new one-year offer is 4.10%.
A useful way to make sense of modified home loan rates is to use our full function mortgage calculator which is also below. (Term deposit rates can be estimated using this calculator).
And if you already have a fixed-term mortgage that is not up for renewal right now, our break cost calculator can help you assess your options. But break fees should be minimal in a rising market.
Here is the updated snapshot of the lowest advertised fixed term mortgage rates currently offered by major retail banks.