Mortgage rates hit 60-year low

BNZ has cut its two-year fixed mortgage rate 30 basis points to 4.69 per cent. Photo / Steven McNicholl

Mortgage rates have hit a 60-year low as banks vie to undercut each other.

BNZ today shaved 30 basis points off its two-year fixed rate, down to 4.69 per cent.

Statistics New Zealand data shows commercial banks' mortgage rates have not been so low since 1955.

BNZ's move follows the Reserve Bank's cut to the official cash rate by 25 basis points to 3 per cent last Thursday.

BNZ's new rate undercuts SBS Bank's 4.85 per cent 18 month rate.

Interest.co.nz said the rate was available to BNZ customers who had at least 20 per cent equity in their property and who had a BNZ account receiving salary or wages.

Massey University banking expert David Tripe said BNZ's new rate was "probably somewhere near where rates ought to be".

"Rates haven't been coming down to the extent that they ought to as funding costs have fallen.

"I've been saying for some time that there's some scope for fixed rates to come down, because they haven't come down as much as they might have."

Mortgage broker Bruce Patten said BNZ's move was good for consumers.

"I think it's just the beginning of some more to come given the recent rate drops and expectations of further rate drops.

"All I would say to people is 'don't get sucked in by what appears to be good now when it could get even better'.

"The banks are really just trying to lock in and secure their funding with some good rates, I wouldn't necessarily be drawn on what might look good now.

"A few months ago 5.99 looked really, really good and now people are scrambling to get out of them."

Across the ditch, mortgage hunters could get fixed, 5-year rates as low as 4.39, Patten said.

If the OCR dropped to 2 per cent as some economists were predicting it would then fixed mortgage rates could drop down closer to 4 per cent or even sub-four, Patten said.

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