The Red Bank joins the rate cutting party with a 'special' rate lower than its rivals

This morning, Westpac has launched a two year ‘special’ at 4.89%.

This is -0.10% lower than all its main rivals for this term.

And it is the same rate that most other main banks are offering for a one year fixed term.

Only SBS Bank’s 18 month rate of 4.85% is a lower rate in the market at this time.

Westpac’s ‘specials’ criteria are extensive and are a minimum of 20% equity, salary credit to a Westpac transaction account plus a Westpac credit card or a specified Westpac insurance product, to be approved or issued prior to drawdown date. This special fixed interest rate cannot be used in conjunction with any other Westpac home loan offers or discount packages, including previously negotiated offers, legal fee contributions or the Westpac Choices Home Loan with Airpoints. The required insurance component is one of …
a) 
Term Life Cover, Gold Disability Income Cover or Flexicover,
b) Home Cover, Contents Cover or Vehicle Cover, or 
c) Gold Term Cover.

Most banks have moved their home loan rates lower in the past week, and there is a reasonable chance that they may go lower still.

The whole mortgage market is settling into a downward trend and this is likely to continue.

The next RBNZ OCR review is on July 23 and wholesale markets are pricing in more rate cuts from the regulator over the balance of 2015. Some see multiple -25 bps cuts.

Although they are not the only influence in setting home loan offer rates, wholesale swap rates do set the minimum cost limit, and these wholesale benchmarks have been falling quite markedly recently. You can track their movements here.

Global uncertainties and those recent signals from the Reserve Bank have both built a sinking tone into New Zealand interest rate markets.

See all banks’ carded, or advertised, home loan rates here. 

Almost all home loan competition is now back focused on the interest rate. Non-rate incentives have essentially dried up although there are still some worthwhile but targeted incentives available. You can see see the current non-rate home loan incentives here.

The new Westpac fixed mortgage rate compares as follows on Monday morning:

below 80% LVR  1 yr  18mth  2 yrs   3 yrs   4 yrs   5 yrs 
  % % % % % %
4.89 5.55 4.99 5.59 5.75 5.79
ASB 4.89 5.49 5.10 5.39 5.75 5.65
5.19   4.99 5.29 5.65 5.75
Kiwibank 4.89   4.99 5.39 5.75 5.60
Westpac 5.49 5.49 4.89 5.59 5.75 5.79
             
5.15 4.99 4.99 5.35 5.55 5.69
HSBC 4.95   4.95 5.40 5.50 5.60
SBS Bank 4.99 4.85 4.99 4.99   5.59
5.45 5.59 4.99 5.40 5.85 5.85