Mortgage Rate Report: The Spring campaign amongst banks for mortgage business has started, and it has been more aggressive than some expected.
The battle's start coincided with the beginning of the new financial year for most banks (being Australian-owned their year-end is September 30).
Bank of New Zealand kicked things along early with a rejig of its product offering and significant advertising around its 'Unbeatable' rate.
As reported earlier in Good Returns, BNZ now has just a two-year fixed rate in its no-frills Classic range. This started at 7.99%, but has already come back due to increasing competition.
The competition this time around is coming from another of the big banks, Westpac, not the second tier banks as has happened previously.
To date players such as Kiwibank and Bank Direct have been keeping a low profile.
Westpac, which stepped aside from the rate war in previous campaigns, has said it will play this time and it certainly is.
It is matching the lowest in the market, while last time around its rates were consistently around 20 basis points higher than other banks.
One of the points which hasn't been noted is that for customers with big home loans the rates are even lower than what is advertised as Westpac has the Redpac offering for customers which sees another 20 basis points shaved off the regular carded rate.
Another of the surprises is that with such a huge amount of home loans coming up for refinance only one bank is specifically targeting this group.
That is ANZ which has a special package for refinance customers.
National Bank has weighed into the mix with a campaign which addresses what's the most appropriate rate to take?
It is repeating a message made previously by ANZ that although the five-year rate has the lowest term, it is not necessarily the cheapest over the life of the loan.
Borrowers need to be aware that New Zealand is at the top of the interest rate cycle and it is not necessarily a good idea to fix a rate at the peak.
What's on offer at the moment?
Well amongst the big banks the competition is in the two-year fixed rates, which range from BNZ's Classic at 7.95%, though to ANZ and National at 8.10%. All the other banks have a rate of 7.99%.
In the other terms, all the banks have identical rates. As has been the case for some time the lower the term the lower the rates. Six-month bank rates are at 8.40%, three-years are at 7.90% and five-year rates are at 7.50%.
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