3.95% 70-year low

Weekend Herald - - Front Page -

New Zealand’s largest bank is drop­ping its in­ter­est rate to 3.95 per cent — the low­est of­fered by a ma­jor bank since just af­ter World War II. The new rate, to be re­leased to­mor­row by ANZ, is for a fixed oneyear term and will be avail­able for a limited time.

It’s good news for home­own­ers and is likely to spark a mort­gage war with other ma­jor banks ex­pected to fol­low suit when rates drop.

Smaller banks have tempted cus­tomers with rates un­der 4 per cent dur­ing the past month but ma­jor len­ders have not dropped so low since the 1940s. The high­est rate on record was a stag­ger­ing 19.72 per cent in 1988.

ANZ man­ag­ing di­rec­tor re­tail and busi­ness bank­ing An­to­nia Wat­son said the tim­ing of the rate drop was tied to the tra­di­tional spring warm­ing of the hous­ing mar­ket.

Prop­erty sales were gen­er­ally higher from Novem­ber and Wat­son said the rate would only be avail­able un­til early De­cem­ber.

“While the froth has come off the top of house sales, par­tic­u­larly in Auck­land, there is still strong de­mand for homes,” Wat­son said.

“The econ­omy is also go­ing strong — in­fla­tion and un­em­ploy­ment is low, there’s growth in the prov­inces and tourism is boom­ing.”

Bar­foot and Thomp­son’s man­ag­ing di­rec­tor Peter Thomp­son said Oc­to­ber had seen a boost in the Auck­land res­i­den­tial prop­erty mar­ket.

There had been more sales, higher sell­ing prices and new list­ings, he said.

“In com­par­i­son with where the mar­ket has been for the past nine months, Oc­to­ber trad­ing was ex­tremely ac­tive,” he said.

The av­er­age sales price for the month at $937,277 was the high­est

this year and up 1.5 per cent on the av­er­age for the pre­vi­ous three months.

Along with the prop­erty mar­ket, Wat­son said ANZ’s in­ter­est rate drop was driven by New Zealand’s low cash and in­fla­tion rate and grow­ing con­fi­dence in the econ­omy.

Although the lat­est of­fer isn’t the

first be­low 4 per cent, it has been the low­est from one of the ma­jor banks.

In Au­gust Ki­wibank tem­po­rar­ily dropped its one-year rate to 3.99 per cent.

HSBC Pre­mier is of­fer­ing a 3.85 per cent rate for 12 and

18 months and SBS

Bank has a 3.95 per cent two-year rate spe­cial.

ANZ’s fixed two-year rates will also drop to­mor­row — down from 4.35 per cent p.a. to 4.29 per cent p.a. John Bolton from mort­gage

bro­kers Squir­rel said it wasn’t sur­pris­ing to see a lower rate from a ma­jor bank.

“The rates we ne­go­ti­ate with banks are nearly there so it is not a big move for them to go be­low 4 per cent,” he said.

Bolton urged home­own­ers to do their re­search when it came to chas­ing lower rates. “With the lower rates the banks won’t do cash­backs with it, it will be a short term and for a limited time.”

He said it was of­ten bet­ter to go with a longer-term, slightly higher rate, if a cash­back was of­fered.

“I wouldn’t get too ex­cited about the rates in iso­la­tion,” he said.

“If you can get a 4.39 per cent for three years with a $3-4k cash­back of­fer, that’s the equiv­a­lent of get­ting a 4.1 per cent for three years.”

Bolton ad­vised those who did se­cure a lower rate to keep up with pre­vi­ous re­pay­ments. “Pay ex­tra on your mort­gage be­cause the rate is al­ways go­ing to go up again.”

The limited-time spe­cial rates will run from Sun­day, Novem­ber 11 to Sun­day, De­cem­ber 2, avail­able for home loan cus­tomers with a min­i­mum 20 per cent eq­uity.

Photo / Dean Pur­cell

Kirsty Wynn Other big banks are likely to fol­low ANZ be­low 4 per cent which will help home­own­ers.

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