Rate changes abound: 3 majors and a non-major

by Maya Breen20 Jan 2016
SBS Bank announced this morning it has cut rates again, after dropping its 3 year fixed rate special  to 4.65%pa on Monday. 

SBS Bank has since cut its special fixed 12, 18 and 2 year rates to a market leading 4.35% p.a., effective today, for residential and residential investing home loans.

Conditions include a minimum of 20% equity or 30% for Auckland Residential Investing, main bank, and at least one SBS insurance product will also apply.

SBS Bank CFO Tim Loan told NZ Adviser the raft of rate changes shows that the competition in the residential mortgage space is just as hot as ever. 

“It takes a bit of a break over the Christmas period and then starts to really kick in again around about now. This is quite a busy season anyway for residential property so it’s a good time to have sharp and competitive rates out there.”

He says wholesale rates have fallen at the start of 2016, a reflection of broader global activities that are impacting New Zealand’s interest rate environment. 

“When wholesale rates fall, that provides us with more opportunity to come out with sharper rates. 

“It’s timing in terms of the residential property market, it’s timing in terms of wholesale rates falling and banks themselves are hungry to grow their residential books so that competition is still very much alive between the banks,” says Loan. 

In contrast, ANZ announced today it will raise its 1 year special rate to 4.39% p.a. (up from 4.35%) and our 1 year carded rate to 4.89% p.a. (up from 4.85%), effective tomorrow 21 January for new and existing home loans. 

BNZ also lowered rates earlier in the week, dropping its special three-year fixed rate to 4.49%, and its two-year rate to 4.39%, the lowest on the market until SBS topped it by 0.04% with their 24months special fixed rate of 4.35%.

Westpac also changed its two year special rate to 4.39%.

SBS Bank’s Loan told NZ Adviser with falling wholesale rates and global uncertainty, rates at lower levels could stick around for some time to come.  

“It’s hard to see rates getting much lower than they are now because they can only go down so far but I think we might see them down at these sorts of levels for a bit longer than we were expecting.”

The Reserve Bank is due to make its next cash rate announcement next week and Loan says his personal opinion is there won’t be a cut made.  

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