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Mortgage interest rates offered by some banks will increase this week, as the banking sector raises the white flag in the spring mortgage war before it's even started. The increasing cost of wholesale money and the slowing property market are being blamed.
The ANZ and National Bank, which are jointly owned, are hiking their home-loan interest rates tomorrow.
The banks' three-year, fixed-term rates will rise from 8.75 to 8.95 per cent. For a five-year term, the rates increase from 8.6 to 8.75 per cent, but their four-year rate has fallen from 9 to 8.95 per cent.
Kiwibank, which fired the first shot in the seasonal mortgage skirmish by undercutting the other banks with an 8.6 per cent, three-year fixed rate, looks increasingly likely to hike that rate again - possibly this week.
Kiwibank spokesman Bruce Thompson said pressure was coming on wholesale rates - the price at which the banks buy money - making it difficult for the state-owned bank to maintain itsposition.
He said that with wholesale rates on the up, the chances of the other banks moving to axe their rates to match were "remote".
Philip Macalister, publisher of mortgage rate website Goodreturns.co.nz, said the market was unusually quiet.
"By now, you would have expected there to be a lot of action, but there's been far less than I expected. Normally, you'd be seeing quite a few spring campaigns, a bit of aggression in the market."
It appears the battle to win and retain customers is now moving from a focus on interest rates towards more unconventional customer offers.
ASB Bank is fighting the spring campaign by launching a new website - www.iwantahome.co.nz - where it hopes people will go to find a new home. To promote the launch, ASB is offering new and existing mortgage holders the chance to win a new three-bedroom home in Pukekohe, valued at $700,000.
The house will be built over the next six months, and a blog and television show will follow its progress.
ASB marketing head Jonathan Symons said the bank realised finding a mortgage was not that difficult any more - but finding a new home was.
"When we've done research for customers, you find people who have been to upwards of 150 open homes."
The website would offer practical advice about how to buy a house, and the kinds of people prospective homeowners will deal with. It would not be linked to any real estate agencies.
"There is a lot more to a home loan than a rate," Symons said.
Senior manager of housing for Westpac, Mike Davy, said profit margins had been squeezed over the past few weeks. He said all the banks ensured they were competitive with Kiwibank, staying "within range" of its rates. Westpac had moved to 8.75 per cent for a three-year term.
Wayne Besant, managing director of ANZ Retail Banking, said the bank preferred to focus on tailoring offers to individual customer needs.
"While the housing market is certainly slowing, our mortgage book remains strong and we're getting our share of the growth," he said.
In his latest weekly overview, BNZ chief economist Tony Alexander suggested homeowners who may need to borrow money or re-fix mortgages should move now. "I'd look for whoever is offering the nicest discounted rate in the two or three-year area."
What's on offer
* ANZ and National Bank are tomorrow lifting their home loan rates for three and five-year fixed terms.
* ASB is this week launching a new website to help people find a home. It is also running a competition in which its mortgage customers can compete to win a $700,000 home.
* Kiwibank, which kicked off the latest mortgage war with low rates on a three-year fixed term, is likely to increase rates soon.
* Banks are trying to shift focus to products or extras, rather than fight it out for the lowest interest rate.
