The key feature in the home loan rate market during the past week has been Bank of New Zealand’s move to lower its no-frills two and three year rates another 10 points each to 7.45%. The only other bank to move in this period was HSBC which dropped all its fixed year rates for terms of two years or more.
This continues that theme outlined by previous home loan reports from Good Returns that very few of BNZ’s competitors are playing it price war game this time around.
We suggest the reason is that there are concerns about the margins on these loans being too thin.
Also the autumn winter months are traditionally slower periods for lending as few houses are sold during this period. Banks tend to run spring and summer home loan campaigns.
The interesting observation about the housing market though is that latest statistics show that it continues to hold up well at the moment. Figures from the Real Estate Institute show that May was a good month for the housing market with prices rising in nine of the 11 regions surveyed.
The May data ' suggests that the long term trendline for the market is going to remain intact,' REINZ president Howard Morley said.
The other minor trend which has just started to emerge is the shift in focus for rate changes. For the past several months most lenders have cut their four and five year home loan rates.
Yesterday five of the non-bank lenders, Asteron, Cairns Lockie, GEM Home Loans, Premier and United Home Loans all increased their one and two year rates. Most of these increases were around 10 basis points, in many cases putting their rates through the 8% mark.
Supporting the view that it may be a larger trend, the National Bank this morning changed its rates too. Its one-year rate has gone up to 7.90%, and it has changed the term on its 27-month special to 21-months. The rate here is 7.55% for amounts of more than $300,000 and 7.60% for loans under the $300K threshold.
The next few weeks will show if this this is the start of a bigger trend.
One of the key influences on these rates is the Reserve Bank’s official cash rate. Its next review is on July 28, and the market is, at the moment, split on whether there will be an increase or not. Currently the majority view is that there will be no change.
Doubts over the strength of the United States recovering and data showing the New Zealand economy is slowing are keeping a lid on rates.
Two year rates currently range from Kiwibank at 7.3% up to GEM Home Loans on 8.40%, while three-year rates go from BNZ and PSIS at 7.45% up to NZ Mortgage Funds on 8.25%.
To compare rates go to http://www.goodreturns.co.nz/section/200.html
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