TSB offers ‘market-beating’ home loan rate, but broker warns there’s a catch

TSB’s home loan offer is likely a “loss leader” for the bank, and borrowers may need to think carefully about fixing for a year, a broker said.

The TSB announced on Friday that it would offer a one-year fixed rate of 4.69% until the end of the month.

He said he would beat any bid announced by ANZ, ASB, BNZ or Westpac by 10 basis points

The Big Four are currently announcing one-year rates of 5.15%.

* Fears of interest rate hikes prompt homeowners to lock in longer-term rates
* SBA cuts mortgage rates for first-time home buyers
* Mortgage rates are falling – for those who can get one

The SBA revised its forecast for the official exchange rate yesterday, due to stronger than expected economic growth in the June quarter.

Its economists said they now expect it to peak at 4.25%, not the 4% they had previously forecast.

It is currently 3%.

Mortgage broker Bruce Patten said most banks now require customers to re-fix their loans online, rather than with staff, which can sometimes make negotiating more difficult.

ASB economists now expect an OCR peak of 4.25%.


ASB economists now expect an OCR peak of 4.25%.

He said the TSB’s offer was likely a loss leader for the smaller bank.

But he said customers should consider what home loan rates might be on offer a year from now, if they accept the deal.

“If rates continue to rise, we could end up with more rate hikes.”

That could mean coming to the end of the term at a time when rates were peaking, he said.

SBA senior economist Chris Tennent-Brown said it was “interesting times” for interest rates.

“The drop in wholesale rates we saw in July – and some of the associated reductions in mortgage rates over the past two months – have been helpful for borrowers. I don’t know how long this will last – I think the pressure will increase on the shorter terms, especially over the next few months as the Reserve Bank increases again, but also on the longer terms if we see upward pressure in the longer-term wholesale market. financing costs. »

He said earlier that someone fixing for 12 months could find themselves refixing almost at the high point of the market cycle.

“A one-year rate may well mean you are heading for higher rates in 2023. A two-year rate may mean you are heading for a similar or slightly more comfortable interest rate environment.”

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