ANZ and ASB have both followed in Kiwibank’s footsteps, making changes to their one and two year fixed rates. Both banks have dropped their one-year fixed rate to 3.39% to match Kiwibank’s, while increasing their two-year rates. ASB’s two-year rate is up to 3.55% (matching Kiwibank) while ANZ has kept theirs at 3.45%. However, we wouldn’t be surprised if this increased over the next month to be in line with the others.
BNZ and Westpac are yet to make any changes, however it won’t be long before they do. Most banks are looking to exploit the one-year fixed term now that the wholesale swap rate has jumped up from 1.04% to 1.16% this week, which reduces the potential break cost for most households on a current fixed term.
What does this trend mean?
With banks giving preference to the lower one-year term, it could be a small sign that rates are likely to start climbing upwards. If they do however, we don’t predict that it would be by much. A two-year fixed rate at 3.45% to 3.55% is still the best value in our eyes. Due to the cash contribution, the big five banks are still reluctant to meet SBS’s two-year rate of 3.39% so if you are looking for more security around repayments rather than upfront cash, it could be the right option.
Talk to friends at Squirrel about securing a better deal for your mortgage.