Downward trend in fixed rates reverses

News Release August 14, 2003

Downward trend in fixed rates reverses while floating rates ease across board

Floating term mortgage interest rates have eased across the board, while fixed rates firmed, according to the latest mortgage interest rate survey conducted by the Real Estate Institute of New Zealand.

In the month to August 10, fourteen of the eighteen institutions surveyed increased their fixed rates between 0.05 and 0.65 per cent, with most fixed rates raising by 0.25 to 0.35 per cent.

The trend in fixed rates reversed from last month, when the majority of fixed rates dropped by 0.25 to 0.35 per cent.

Conversely, floating rates eased by 0.20 to 0.25 per cent, with fifteen of the eighteen mortgage providers reducing their rate by 0.25 per cent. The current floating rates available range between 6.40 and 7.10 per cent, compared to a range of 6.65 and 7.35 per cent in the thirty days to July 10.

According to the National President of the Institute, Mr. Graeme Woodley, it is generally accepted that New Zealand fixed mortgage interest rates tend to follow the same trend line as that of the USA.

He said, “Long term fixed rates in the US were extremely low, but have begun to trend upward, in the face of increased economic confidence, and that trend is reflected in the latest increases in New Zealand fixed rates.

”While it’s highly possible that the Reserve Bank will cut the Official Cash Rate by 0.25 per cent in September, this will only serve to keep floating rates and short term fixed rates at a lower level, and the gradual tightening expected in New Zealand monetary policy following this will see these rates eventually rise as well. Thus the long term prognosis is that fixed rates will continue to increase.”

In terms of the best option for homeowners, Mr Woodley noted that despite the latest increases in fixed rates, the terms available were still very attractive.

“Long term rates are still extremely competitive and as it seems likely that they will only continue to rise, a fixed term arrangement is well worth considering”, said Mr. Woodley.

As of August 10, one year fixed rates ranged between 5.95 and 6.40 per cent, compared to 5.95 and 6.30 per cent to July 10; two year fixed rates ranged between 6.25 to 6.75 per cent, compared to 5.99 to 6.50 per cent last month; three year fixed rates ranged between 6.55 to 6.95 per cent, up from the previous periods range of 6.30 to 6.70 percent; and four and five year rates ranged between 6.85 to 7.25 per cent, compared to 6.40 to 6.80 per cent in the thirty days to July 10.

-ENDS-

Real estate information is also available via the Institute’s official property directory – RealENZ – on the Internet. RealENZ is a search facility providing comprehensive information on residential, lifestyle, rural, commercial, investment and rental properties. RealENZ’s Internet address is: www.realenz.co.nz

CHART

REINZ MORTGAGE INTEREST SURVEY AS AT 10 AUGUST 2003
INSTITUTIONS FLOATING FIXED 6 Mth FIXED 1 Year FIXED 2 Years FIXED 3 Years FIXED 4 Years FIXED 5 Years
ANZ 7.10  0.25 6.25 6.20 6.50  0.35 6.75  0.45 6.95  0.55 7.00  0.50
ASB 7.05  0.25 5.99 6.20 6.50  0.25 6.75  0.25 6.95  0.25 7.00  0.20
AXA 6.85  0.25 6.25 6.20  0.05 6.49  0.24 6.75  0.35 6.95  0.40 6.99  0.34
Bank of New Zealand 7.10  0.25 6.25 6.20 6.50  0.35 6.75  0.45 6.95  0.55 6.99  0.49
Cairns Lockie Limited 6.75  0.25 - 6.00  0.10 6.67  0.25 6.89  0.35 - 7.16  0.50
Elders Home Loans 6.80  0.25 - 6.40  0.20 6.75  0.25 6.95  0.35 - -
General Finance Limited 7.10  0.25 - 6.40  0.10 6.75  0.25 6.95  0.35 - 7.25  0.50
HSBC* 7.05 6.25 6.10 6.40 6.75 6.85 6.99
Kiwi Bank 6.40  0.25 5.95 5.95 6.45  0.35 6.70  0.40 6.90  0.50 6.95  0.45
National Bank 7.05  0.25 6.20 6.20 6.50  0.25 6.75  0.45 6.95  0.55 7.00  0.50
NZ Guardian Trust 7.05  0.25 - 6.50 - 6.70 - -
NZ Home Loans* 6.95 5.99 6.20 6.50 6.75 - 7.00
Public Trust National Mortgage Unit 6.95  0.25 - 6.20  0.10 6.45  0.25 6.75  0.40 6.95  0.45 6.99  0.44
SBS 6.90  0.25 5.95 6.15 6.50  0.25 6.80  0.40 - -
Sovereign Limited 6.95  0.20 5.99 6.20 6.50  0.25 6.75  0.25 - 7.00  0.20
Tower Trust 7.05  0.25 - - - - -
TSB Bank 6.95  0.25 - 6.20  0.05 6.25  0.26 6.55  0.25 - -
WestpacTrust 7.10  0.25 5.99  0.26 6.19 6.60  0.35 6.79  0.49 6.95  0.55 7.15  0.65

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. * = No previous month comparison possible

REINZ MORTGAGE INTEREST SURVEY AS AT 10 AUGUST 2003

INSTITUTIONS FINANCE MAX TRANSFER EARLY MAX FRONT END FEE
RATE (%) VAL MORTGAGE REPAYMENT TERM
PENALTY
ANZ 7.12 95% YES YES** 30 Max $400
ASB 7.122 95% YES YES 30 Up to $500
AXA 6.9144 90% YES YES 25 Up to $500
Bank of New Zealand 7.1249 95% YES YES 30 Min $250 Max $500 (Note: no 1% minimum)
Cairns Lockie Limited 6.80 95% YES YES** 25 0.50%
Elders Home Loans - 90% YES YES † 25 0.25%
General Finance Limited - 95% YES YES** 25 0.50%
HSBC - 95% YES YES 25 Nil
Kiwi Bank - 95% YES YES 30 Nil
National Bank, The 7.10 95 YES YES 30 Up to $400
New Zealand Guardian Trust* - 67% YES YES** 20 Up to 1% to minimum $250
New Zealand Home Loans 6.98 95% YES YES 30 $250
Public Trust National Mortgage Unit 6.95 90% YES YES 25 Nil if loan is within policy
SBS* 7.00 95% YES YES 25 .50%
Sovereign Limited 7.00 95% YES YES 30 Up to 1.0%
Tower Trust 7.18 75% YES NO † 25 1% Negotiable
TSB Bank 7.00 80% YES YES** 40 $400
WestpacTrust - 95% YES YES 30 Max $250

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. ** = Fixed only † = Conditions apply

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