Westpac slashes four and five-year mortgage rates to new market low
Westpac has slashed its four- and five-year home loan rates to 5.99%, the lowest rate in more than a decade.
The new rate is effective today and is for a limited time – an attempt to encourage customers to lock in their mortgages on fixed terms in the competitive mortgage market.
Until now, the interest rate battles between the banks have focused on shorter-term rates of fixed rate terms of two years or less.
Westpac says all its fixed-term mortgage rates are now below 6%.
The four-year rate has been reduced 21 basis points from 6.20% to 5.99% and the five-year rate has fallen 61 basis points from 6.60% to 5.99%.
Among the major banks, the closest match to Westpac’s four-year fixed rate is TSB and ASB, offering 6.1%. All the other major banks are offering 6.2%.
Westpac’s floating rate remains 5.6%.
The official cash rate, which influences the rates banks set for mortgages, is widely expected by economists to remain at 2.5% until the end of next year at least.
Data in the Reserve Bank’s latest monetary policy statement reveals there has been a dramatic shift away towards floating rates since the end of 2008.
And the shift has accelerated again in the last few months.
The proportion of mortgages on floating rates peaked in April at 63.1% of all mortgages and has fallen away to 58.7% currently.
gbond@nbr.co.nz
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Comments and questions4
great news for real estate agents
Real estate agents and banks are almost telling people this property boom in Auckland will go on forever.
I have been around long enough and have seen many property booms in my time. They all follow with a bust at some stage.
Everything works in cycles and when this cycle finishes, there will be a lot of people who have borrowed too much and will be in serious trouble.
These people are borrowing heavily and paying top dollar for their houses because they think there will always be someone who will pay more later on for them.
I think you'll find that although there may be a perceived 'property boom' there are still very few homes for sale. And whilst the rest of the world is in recession (look around) NZ interest rates wil stay low (low for NZ but still very high globally).
At present the residential property market appears to be driven by greed and fear. Greed for expected capital gain and fear of missing out. Prices are well above what is considered sustainable from an affordability viewpoint and the hype and emotion in the market has the feeling of a bubble about to burst. Question is how much higher will it go and how much will it fall afterwards. There are some underpinning rises in construction costs and the Auckland Councils zoning restrictions which are reducing the supply of dwelling sites increasing prices and may limit the extent of the fall. But it still feels like a bubble.