Floating mortgage rate hits 1.9%
The main banks currently charge from 3.4 per cent to 4.59 per cent for a floating rate mortgage. At those rates the banks aren’t being robbed, they’re doing the robbing.
Sam Stubbs (left), co-founder, Simplicity
Mortgage interest rates have hit a record low of 1.9 per cent.
Default KiwiSaver provider Simplicity said it had just cut its first-home floating mortgage rate to “a record low in New Zealand”.
It was previously offering firsthome loans at 2.25 per cent and yesterday’s move marks the fifth rate drop the nonprofit has made since launching its first home loan offering in late 2019.
Heartland has a 1.95 per cent floating rate so the new Simplicity rate is beneath that.
The Reserve Bank said on Wednesday that after examining the potential impacts of debt-to-income lending limits on the housing market, it was determined such a policy would help cool the housing market.
“Our analysis detailed that debt serviceability restrictions, such as a debt-to-income (DTI) limit are likely to be the most effective additional tool that could be deployed by the Reserve Bank to support financial stability and house price sustainability,” it said.
“The analysis also [indicated] any such restrictions would impact investors most powerfully while having limited impact on first-home buyers.”
House prices in New Zealand have escalated because of returning economic growth post-Covid, record low interest rates and expansionary economic policy.
Sam Stubbs, co-founder of Simplicity, said yesterday: “Someone has to keep the banks honest, and the current interest rate climate supports lower mortgage rates.
“The main banks currently charge from 3.4 per cent to 4.59 per cent for a floating rate mortgage. At those rates the banks aren’t being robbed, they’re doing the robbing,” he said.
Simplicity first-home loans are for 30 years and have a floating interest rate. That means any or all of the principal can be paid off at any time, without penalties or break fees.
In January, Westpac dropped its one-year fixed-term mortgage rate to 2.29 per cent. The Herald reported then that SBC is also lower than the majors with a rate of 2.25 per cent.