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Weekly Home Loan rate report

Mon, 7 Feb 2005

Weekly Home Loan rate report

One of the noticeable features of home loans last week was that quite a few lenders increased their longer term fixed rates, ie: rates of three years or more.

Generally the increases were quite small (around 10 basis points), but nevertheless these were some of the first increases in this area for a long time.

These increases coincide with the United States Federal Reserve putting its cash rate up 25 points to 2.50%.

Three-year rates currently range from 7.50% (Bank Direct) to 8.35% (GEM Home Loans). The mainstream banks are all around the 7.70% mark, the highest being ASB (which put its rates up on Friday) at 7.80%.

There was little movement in the floating rate area - mainly because the Reserve Bank left the OCR unchanged the week before.

Amongst the banks BNZ increased all its fixed rates, ASB put up its two, three, four and five year rates, and HSBC put up its one, two and three year rates.

The biggest non-bank lender, Sovereign, increased its two, three and five year rates.

The only rate decrease was Global Home Loans which put its one and two year rates down to 7.65%.

What's the best deal at the moment? No-one is too keen on floating rates as the view is that they will stay where they are for most of the year and they may even go higher.

However, there is no clear consensus on fixed rates. Some suggest fixing for terms of around one to two years on the basis that rates will start falling at the end of the year, others are suggesting fixing for up to three years is a valid option.

Also worth noting is that opportunities will arise during the year to fix on periodic dips in wholesale fixed rates, or when lenders enter into a price war.

To compare all the latest rates go to


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