Lending Institutions Start To Trim Mortgage Rates

REAL ESTATE INSTITUTE
MEDIA RELEASE
Tuesday 10 September 2002

Lending Institutions Start To Trim Mortgage Rates

Floating mortgage rates offered by major lending institutions have been trimmed to under 8 percent according to the latest REINZ Mortgage Interest Rate Survey conducted this morning (10 September).

REINZ National President, Rex Hadley, said seven of the 18 lending institutions surveyed had eased back floating rates during the month.

“Clearly this is the result of increased competition in the marketplace, with one of the newer lenders now offering floating rates as low as 6.95 percent.

“However, despite this competitive move designed to gain market share, the other lenders still have the ability to drop rates with the Reserve Bank’s OCR remaining unchanged at 5.75 percent. As a rule of thumb, floating rates are generally based between 1.5 – 2 percent above the 90-day bank bill rate and with that currently sitting at 5.84 percent there is plenty of profitable margin for lenders.”

As at 9 am this morning, rates for first mortgages ranged between 6.95 and 7.85 percent, with all but one of the lenders surveyed sitting in a tight band of 7.60 – 7.85 percent.

Competition for business with one year rates was far more intensive with two lenders currently offering the lowest rate available of 7.05 percent. The highest one year fixed rate on offer was set at 7.25 percent.

“This ‘trimming’ effect has spread into most of the fixed rates on offer,” Mr Hadley commented. “All but four of the institutions surveyed dropped their one year fixed rate during the month.”

Similar trimming had been effected for most other fixed mortgage products on offer. Thirteen of the lending institutions surveyed had moved fixed rates downwards, over periods ranging from 6 months to five years, during the month. No increases in mortgage rates were recorded by the survey.

Rates for fixed mortgages ranged between 6.75 and 7.05 for a six month period; 7.25 – 7.45 for two years; 7.45 – 7.65 for three years; 7.55 – 7.65 for four years with five year rates set between 7.60 and 7.75 percent.

“Since we started conducting the REINZ Mortgage Survey over a decade ago, we’ve noticed a tendency among lenders to respond far more quickly to increase their rates if the OCR or 90 Day Bank Bill rate rises, than to drop them following a fall.

“It will be interesting to see how long it takes for lenders to respond to the pressure of one lender offering floating mortgages under 7 percent!”

- ends -

REINZ MORTGAGE INTEREST SURVEY AS AT 10 SEPTEMBER 2002
LENDING INSTITUTIONS FLOATING (%) FIXED – 6 Mnth (%) FIXED – 1 Year (%) FIXED – 2 Year (%) FIXED – 3 Year (%) FIXED – 4 Year (%) FIXED – 5 Year (%) FINANCE RATE
(%) MAX VAL (%) TRANSFER MORT EARLY REPAYMENT PENALTY MAXIMUM TERM (Years) FRONT END FEE
ANZ 7.85 6.95 7.20 7.40 7.55 7.65 7.70 7.88 95 + Yes Yes 30 $500 maximum
ASB 7.85 6.95 7.20 7.40 7.55 7.65 7.70 7.923 95 ± Yes Yes 30 $500
AXA New Zealand 7.69 6.95 7.20 7.40 7.55 7.65 7.70 7.757 90 Yes Yes 25 Up to $500
Bank of New Zealand 7.85 6.95 7.19 7.39 7.55 7.65 7.69 7.8718 95 Yes Yes 30 Min $250 – max $500
Cairns Lockie Limited 7.60 - 7.11 7.37 7.54 - 7.71 7.65 95 Yes Yes 25 $400
Elders Home Loans 7.65 - 7.20 7.45 7.60 - 7.80 7.70 90 Yes Yes # 25 0.25% minimum $400
General Finance Limited 7.95 - 7.20 7.45 7.60 - 7.80 8.02 95 Yes Yes 25 0.50%
HSBC 7.65 6.75 7.05 7.30 7.45 7.60 7.70 n/a 95 Yes Yes 25 Nil at present
Kiwibank 6.95 6.75 7.05 7.25 7.45 7.55 7.60 - 95 Yes Yes 30 No application fee
NZ Guardian Trust 7.55 - 7.25 - 7.60 - - 7.568 66.66 Yes Yes 20 1% maximum - negotiable
NZ Home Loans 7.70 6.95 7.20 7.40 - 7.55 7.70 7.73 95 Yes Yes 30 $250
National Bank 7.80 6.95 7.20 7.40 7.55 7.65 7.70 7.84 95 Yes Yes 30 $400 for owner occupied
Public Trust National Mortgage Unit 7.70 - 7.15 7.40 7.50 7.60 7.70 7.70 90 Yes Yes 25 Nil
Southland Building Society 7.80 6.75 7.15 7.40 7.65 - - 7.50 95 † No Yes 25 1% negotiable
Sovereign Limited 7.85 6.95 7.20 7.40 7.55 - 7.70 7.90 95 Yes Yes 30 Up to 1%
Tower Trust 7.80 - - - - - - 8.03 75 Yes No if 30 days notice given 25 1% negotiable
TSB Bank 7.70 6.95 7.10 7.35 7.55 - - 7.75 80 Yes Yes 25 $400
WestpacTrust 7.85 7.05 7.15 7.40 7.55 7.65 7.75 - 95 Yes Yes * 30 $250 max

The above information is intended as a guide only. Although the information is understood to be accurate at the date of publication, the Real Estate Institute does not itself, or on behalf of any named lending institution, represent that financial assistance will be available to any borrower on the terms noted.
† over 80% valuation required * may apply # only if repaid in first three years + with lenders’ mortgage insurance Valuation ± terms apply
All information © 2002 REINZ Comments or queries? REINZ
REINZ will not accept any responsibility should any information prove to be incomplete or incorrect.

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