There is good news for the homeowners who are refinancing the $42 billion of fixed home loans that are maturing this year.
That is it looks like rates may start falling more quickly than has been predicted, especially by the Reserve Bank.
Reserve Bank governor Alan Bollard has, previously, made it clear that he doesn’t expect to cut rates until next year, however the poor economic growth numbers released on Friday suggest cuts could be brought forward.
According to official statistics the economy went backwards 0.1% in the December quarter and there is now a higher probability New Zealand will experience a recession – albeit small.
Following the GDP figures there have been a swarm of rate cuts.
Things started quietly last week, in fact there had been very few rate changes since the Reserve Bank’s OCR announcement a week earlier. Early in the week Mortgage Finance and PSIS dropped their two-year rates to 7.70% and 7.80% respectively.
Then on Thursday BNZ knocked 15 points off its Classic loan, offering a two-year term at 7.70%. That was followed by TSB withdrawing its two-year special of 7.79%, and substituting a lower 7.70%, with conditions of a minimum loan amount of $200,000 and maximum LVR 80%. Like BNZ, TSB is not offering the deal through brokers.
That brought most of the second tier banks and a few other lenders into line in the two-year fixed space.
Yesterday and today we have seen a swarm of cuts. Westpac has taken 15 points off its two year rate dropping it to 7.80% and ANZ have made significant cuts across their fixed rate products, with the biggest reduction being to its four-year rate, dropping to 7.55%. Its two-year rate is 7.75%.
Also a raft of non-bank lenders; Argosy, Asteron, Cairns Lockie, General Finance, GEM, NZ Mortgage Funds, Premier, Tasman and United have cut most of their fixed rates.
Most interesting of all though is a six-month special from BNZ priced at 6.99%. The deal has conditions on it and it appears to be aimed at giving people a stepping stone to better refinance options towards the end of the year when rates will be lower.
It is only available on up to 50% of a loan, and the remainder has to be taken out with any one of its other home loans.
In the marketplace, variable rates start at 8.50% from Napier Building Society and spread to 9.95% at NZ Mortgage Income Trust.
One-year rates are between 7.60% at Southern Cross and 9.0% from GEM Home Loans, while three-years vary between 7.50% from Kiwibank and Mortgage Finance to Headstart’s 9.15%.
For four years, Pacific Prime and Superbank offer 7.80% and the lenders spread narrowly up to NZ Mortgage Funds’ 8.11%. The five-year range is now between 7.40% from NZ Home Loans and Sovereign to Gem Home Loans’ 8.35%.
To compare mortgage rates visit the Good Returns Mortgage Centre
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