Westpac is pressing its competitors with the lowest interest rates ever.
The bank today announced a mortgage rate of 2.29 percent – the lowest currently offered by any of the four major banks.
However, there is a limitation that special rates are only available for a fixed period of one year for customers with 20 percent equity in the owner’s occupied home.
Westpac NZ wealth and consumer banking general manager Gina Dellabarca noted how this rate compares to previous years.
“Two years ago the same special home loan rate for the same period was 4.15 percent,” he said.
“It costs $ 1,119 two weeks to pay off a $ 500,000 mortgage over 30 years. Now, a lower interest rate means the same payment would be $ 885 two weeks – a savings of $ 6084 over the year.”
Dellabarca said the one-year rate is currently the bank’s most popular rate.
“We helped first-home buyers to more than 5300 new homes in the 12 months to September 2020, a 7 percent increase from the previous year with many accessing their Kiwisaver first home buyer withdrawal option to assist them with their deposits.”
Although the 2.29 percent rate is the lowest among the big banks, it is not the lowest when smaller players are also considered.
Heartland Bank currently offers a one-year interest rate at 1.99 percent. This, New Zealand’s first sub-2 percent tariff, was first released in October last year and is only available to customers who refinance or purchase a self-contained home in one share, have a deposit or equity of at least 20 percent – and intend to stay home.
With a fixed one-year rate currently at 2.25 percent, HSBC is also offering better rates than the one released by Westpac today.
While low interest rates can be attractive, homeowners are advised to first check with their bank or mortgage broker to see if the associated break costs make the savings worthwhile.
The low rates currently on the market come at a time of growing concern about the state of the property market in New Zealand.
REINZ data shows the average Auckland house price hit $ 1 million for the first time in October last year, and the national average jumped 19.8 percent from $ 605,000 last year to $ 725,000.
And the high price didn’t dampen the enthusiasm of the buyers much because in November the highest number of houses had been sold since March 2007.
Economists now estimate that house prices could increase by as much as 13 to 16 percent in the coming months.
This will only put further pressure on the many Kiwis currently locked out of the housing market with home ownership rates at the lowest levels since 1951.
Rapidly rising house prices also have an impact on those on the property ladder, with data from credit agency Centrix showing that nearly one in five over 65 years still has a mortgage.