Home loan rates may not fall much further

Wholesale interest rates, driven down by Australia’s official interest rate cuts, are supporting lower mortgage rates. The two-year swap rate has fallen 7bps to 2.51% and the New Zealand dollar is down about 30pts to 0.8150 since the release of the June quarter inflation data.

ANZ’s latest property market report said that banks had also responded to the ANZ/National Bank merger by lowering their rates to attract customers. Several banks are now offering short-term fixed rates below 5%. ANZ moved to match them – offering 4.95% for up to a year for borrowers with more than 20% equity. (You can see and sort all the home loan rates in our table here)

“The mortgage rate curve remains ‘tick-shaped’ with the two-year rate offering the cheapest carded rate for lower levels of equity. The RBNZ is expected to remain on hold until early 2014 and we continue to see value in fixing for one to two years,” the report said.