Two more banks cut their two year rates as the home loan market struggles to find the volumes it needs from a quiet housing market. Borrowers have the advantage

The mortgage market is stirring.

Low house sale volume is making this a tougher market for banks.

Today, two banks announced reductions in their key two-year fixed rates.

Kiwibank has reduced its two-year ‘special’ by -14 bps to 4.65%.

This is now a market-leading carded rate, lower that all its rivals (except the HSBC Premier rate) for that term.

Kiwibank ‘specials’ only require a “minimum 20% equity” to qualify, unlike some others who require you to take other products like cards or insurance.

The rate applies to Welcome Home Loan clients as well who meet that minimum equity. Otherwise all customers for a two year fixed rate will be charged 5.15%, itself a -14 bps reduction.

This new rate also applies to AMP Home Loan customers.

In addition, SBS Bank has announced a -6 bps reduction in its two-year fixed rate to 4.79%.

For both banks, each new rate will become effective on Monday, August 28, 2017.

Ten days ago, both ANZ and Westpac both reduced their two-year fixed rates.

Two year wholesale swap rates have essentially been flat over the past month. So all these recent reductions will involve margin tightening by banks to win or retain market share – in a thinning market.

The spring selling season in the housing market won’t really start in earnest for three to five weeks yet and more banks will likely enter the fray then. But in between we have an election, which may be adding the the current dampening effect. A hung election result, potentially through to the Return of Writ day in mid October may extend this period of uncertainty if Winston Peters holds the balance of power at that time.

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

Here is a snapshot of the fixed-term rates on offer from the key retail banks.

below 80% LVR 6 mths  1 yr  18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
  % % % % % % %
4.99 4.55 5.15 4.75 5.59 5.89 6.09
ASB 4.95 4.45 4.70 4.79 5.09 5.59 5.79
5.35 4.59 5.05 4.79 5.09 5.89 6.09
Kiwibank 4.99 4.45   4.65 5.09 5.75 5.99
Westpac 5.25 4.59 5.15 4.79 5.09 5.89 5.59
4.80 4.59 4.75 4.85 5.09 5.55 5.75
HSBC 4.85 4.09 4.09 4.29 4.89 5.29 5.59
HSBC 4.99 4.59 4.85 4.79 5.25 5.49 5.85
4.85 4.55 4.75 4.79 4.99 5.65 5.79

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

And TSB Bank still has a ten year fixed rate of 6.20%.