Short‑term bargains, pricier long fixes complicate refix choices
New Zealand mortgage advisers are facing a more complicated rate card from BNZ, with the major bank trimming its six‑month home loan rate while lifting longer‑term fixed offers in line with rising funding costs.
BNZ has lowered its six‑month rate by 20 basis points to 4.49%, while increasing its four‑year rate by 26 basis points to 5.55% and its five‑year rate by 40 basis points to 5.69%. The changes take effect today, and borrowers with less than 20% equity will still pay a low‑equity interest‑rate premium.
Majors move in step as funding costs rise
BNZ’s repricing follows similar moves from other big banks. Last week, Westpac increased most of its standard and special home loan rates, and also cut its six‑month offering, saying the changes were “a response to recent changes to funding costs.” Earlier in January, ANZ increased its floating and flexible home loan interest rates, 1News reported.
Infometrics chief executive Brad Olsen said BNZ’s longer‑term increases largely bring it into line with its peers.
“The increases bring their rates to roughly where everyone else has moved to over the last couple of weeks,” Olsen told RNZ.
Olsen pointed to wholesale markets as a key driver.
“I think pressure is starting to come on a little bit more when it comes to funding rates, given that if you look at two- to five-year swap rates, they have increased by about 20 basis points again between the end of December and the end of January,” he said. “There's probably an element of trying to wait as long as possible but the realities for bank funding have now become more apparent.”
Olsen added that recent cashback promotions show banks still want to compete for quality borrowers.
“I wouldn't be surprised if there was a little bit of a pause until you get a better read at the end of the month when the Reserve Bank makes the decision about the official cash rate. Because at that point, you'll have a bit of a stronger view of what's the likely path forward,” he said.
Did borrowers miss the five‑year window?
With BNZ now pricing four‑ and five‑year money higher, advisers can expect more “did I miss it?” conversations from clients who hesitated late last year.
Olsen said it was likely that “the talk at the end of last year about whether it was the right time to fix for five had probably proved to be correct. That's always the beauty of hindsight, right?”
For Kiwi mortgage advisers, the combination of a cheaper six‑month option, more expensive longer fixes, and a 18 February OCR decision under new governor Anna Breman means structure and timing will matter as much as headline rates when guiding clients through their next refix.
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