The State-owned bank is the latest in a steady stream of banks who are raising fixed mortgage rates. But the rises are not based on rising wholesale rates

Kiwibank is the latest bank to raise fixed mortgage rates.

From Monday, February 6, 2017 all its fixed rates for terms of one year and longer will go up on its rate card.

Its one year rate will rise by +10 bps to 4.45%.

Its two year fixed rate will rise by +14 bps to 4.79%.

The rise for its three year rate is +20 bps to 5.25% and that is now the highest rate for this term from any New Zealand bank.

However, its four year rate it only goes up +10 bps to 5.65%.

Their five year carded rate also rises +20 bps to 5.85%.

Kiwibank last raised fixed mortgage rates on January 9, 2017 (when it also raised its floating rate), and on January 23, 2017.

Here is a way to see 2017 changes from Kiwibank:

  as at
Dec 31, 2016
January 9
change
January 23
change
Today’s
change
New rate
Feb 6, 2017
  % % % % %
Floating rate 5.25 +0.15 5.40
6 mth fixed 4.75 +0.10 4.85
1 year fixed 4.24 +0.11 +0.10 4.45
2 years fixed 4.39 +0.15 +0.11 +0.14 4.79
3 years fixed 4.75 +0.20 +0.10 +0.20 5.25
4 years fixed 5.30 +0.15 +0.10 +0.10 5.65
5 years fixed 5.40 +0.15 +0.10 +0.20 5.85

These changes from Kiwibank are more about positioning against its rivals than wholesale funding pressures.

There were no equivalent term deposit rate changes made at this time

In 2016, wholesale money costs had risen and put margin pressure on banks. But so far in 2017 that pressure has not continued.

Since December 31, 2016, one year swap rates have actually fallen -3 bps, the two year swap has actually fallen -4 bps, the three year swap has fallen -3 bps, and the five year swap has risen +2 bps.

The above fixed mortgage rate rises don’t seem to be based on wholesale rate movements in 2017.

Today’s changes alter who has the leading carded rates for mortgage borrowers. HSBC Premier has the market leading position for all terms at this time. Other than HSBC Premier, the banks who now have the lowest bank rates include Kiwibank is now in a group of four who offer 4.45% for one year, the Co-operative Bank has the next lowest 18 month rate, and TSB Bank has the next lowest rates for all terms 2 to 5 years.

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

A snapshot from the key retail banks is:

below 80% LVR  1 yr  18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
  % % % % % %
4.45 5.05 4.75 5.49 5.70 5.85
ASB 4.59 4.75 4.79 5.09 5.49 5.69
4.59 5.05 4.79 5.09 5.89 6.09
Kiwibank 4.45   4.79 5.25 5.65 5.85
Westpac 4.59 5.05 4.79 5.09 5.69 5.49
             
4.55 4.70 4.85 5.15 5.55 5.65
HSBC 4.19 4.29 4.39 4.69 5.09 5.29
HSBC 4.45 4.75 4.75 5.09 5.45 5.69
4.45 4.75 4.65 4.99 5.40 5.45

In addition to the above table, BNZ has a fixed seven year rate which is 6.15%.

TSB Bank has a ten year fixed rate of 5.75% and that is unchanged in today’s update.