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New Zealand home loan rates might be falling, but how do they compare to those of the rest of the world?
More rates have dropped below 5 percent in the past week as banks responded to a cut to the official cash rate and falling wholesale rates.
ANZ in New Zealand is offering 4.99 percent for two years.
ANZ in Australia, meanwhile, was this week offering a two-year fix at 5.74 percent. There, the cash rate is 4.1 percent, compared to 3.5 percent here.
ANZ offered Australian borrowers floating rates of 6.99 percent at ANZ, and New Zealand borrowers 6.69 percent.
In the UK, HSBC was offering a two-year fixed first-home buyer rate at 4.25 percent. Floating was 6.74 percent and a five-year fix 4.1 percent.
In the US, a 30-year fix was 6.7 percent and a 15-year fix 5.96 percent.
Fiji had a one-year fix for 3.95 percent and Canada a three-year fix for 4.29 percent. Sweden had a two-year fix for 3.49 percent and Japan a 1.89 percent rate for 10 years.
Kelly Eckhold, chief economist at Westpac, said the types of rates that appealed to borrowers varied around the world, and pricing reflected that.
"In the US, everybody goes for very long-term fixed rates. In Australia, it's predominantly floating. In the UK floating rate products are tied to the Bank of England base rate… it depends on the country."
David Cunningham, chief executive at mortgage broking firm Squirrel, said it was hard to compare between countries because of the different factors that could drive rates.
He said one factor that varied was where banks got their funding from, and the cost of that funding.
In Australia, banks paid relatively good rates on savings accounts but term deposits were often in line with wholesale rates, he said.
"Whereas like New Zealand we've got quite a different dynamic. Banks tend to pay less on savings accounts and a lot more on term investments… So all those dynamics are done on that side. That's one thing. And the second thing is bank capital rules.
"So in New Zealand banks have to hold a truckload more capital than they do in Australia… so you're holding more capital, you've got to earn more money to justify having that capital deployed that way."
He said, 30 years ago, home loan lending in New Zealand was largely on floating rates.
But banks started to offer fixed specials, expecting a small number of people to take them up.
"Then it became, you know, it was more than a few people and eventually it became the whole market was fixed rates at low margins and the floating margins ...people don't seem to care what their interest rate is there.
"So those margins expanded while fixed margins contracted. So we've got this really weird and globally unique situation, in New Zealand, where margins on floating rate loans are about, well sometimes double the margins on fixed rate loans and that's why almost everyone in New Zealand has a fixed rate whereas in Australia, by comparison almost everyone's on floating."
He said Canada's typical fixed term was five years, while the US was 30.
"Every market is a bit different, which again makes comparing between markets really difficult, but I think the underlying thing I'd say is the down long-term downward trend in interest margins and banking in New Zealand stopped three or four years ago… that was when Covid happened and interest rates got really low. But the underpinning thing is, you know, banks have to hold a lot more capital than anywhere else in the world, pretty much."
Jarrod Kerr, chief economist at Kiwibank, agreed the higher capital requirements here probably meant that New Zealand interest rates were higher internationally over the course of a cycle.
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