New Mortgage Rates In NZ For June 2021

Date Jul 26, 2021
Blog category Mortgage
By Tina M.
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Contents:

Several banks have announced an increase in mortgage rates, which could have a significant impact on the New Zealand residential property investment market. This now brings higher average weekly mortgage repayments, especially for first-time homebuyers. 

Following the announcement of ASB's new mortgage and term deposit rates, ANZ, BNZ, and Westpac updated their mortgage rates, effectively ending the downward trend in interest rates.

ASB raised its 1 year fixed mortgage rate from 2.19% to 2.55% ahead of the Reserve Bank of New Zealand's (RBNZ) Monetary Policy Review and official cash rate (OCR) announcement. Its 2-year fixed-rate increased as well, from 2.59% to 2.95%. In the meantime, its 6-month, 18-month, 3, 4, and 5-year rates all increased by 0.30%.

According to the NZ Herald, ANZ has increased its 1-year rate by 31 basis points to 2.5%, its two-year rate by 31 basis points to 2.9%, and its 3-year rate by 25 basis points to 3.24%.

BNZ has also raised its 1-year interest rate by 36 basis points to 2.55%, its 2-year rate by 40 basis points to 2.95 percent, and its 3-year rate by 26 basis points to 3.25%.

Westpac soon followed, increasing its 1-year rate by 36 basis points to 2.55% its 2-year rate by 30 basis points to 2.89%, and its 3-year rate by 30 basis points to 3.29%.

New Standard Residential Mortgage Interest Rates as of June 2021

Rate

June 2021

Floating

4.47%

6 months

3.74%

1 year

3.17%

18 months

3.10%

2 years

3.47%

3 years

3.49%

4 years

3.95%

5 years

4.22%

Source: Reserve Bank Of New Zealand

Biggest Cities in NZ 

Buying a home at this time may not be the best option for everyone, but you can't go wrong with proper planning and getting the right people to assist you.

Before we get to the average mortgage rate in each city, let's take a look at New Zealand's largest cities and their respective real estate values as of June 2021. So far, all regions both in North and South Island have increased between 17% in Otago and 56% in the Marlborough region. 

Demand is also a factor in determining house prices; the more people there are in a given area, the more expensive properties are.

City Population House Median Price 

Auckland City

1,717,500  $1,329,000

Christchurch City

383,000 $580,000

Wellington City

216,505 

$1,035,000

Hamilton City

176,500  

$770,000

Tauranga City

151,300

$941,000

Napier City 

66,300

$810,000 

Lower Hutt City

111,000 

$880,000

Dunedin City

134,100

$610,000

Palmerston North City

82,000 

$660,000

Rotorua City

59,000

$587,500

Sources: NZ Pocket Guide/ Informetrics NZ/ Demographic Resources 

What’s the average mortgage rate in NZ?

In an example given by Interest.co, a $395,947 mortgage would be required to purchase a home at the current median price of $680,000. The repayments on this loan would be $400.02 every week, or 20.8 percent of your weekly income. Mortgage payments are considered affordable if they account for no more than 40% of your gross income.

Others say that you shouldn’t exceed 25% of your take-home pay, and you should get a fixed-rate mortgage with a term of 15 years or less. You may get a considerably bigger loan now than you could get with just 25% of your take-home salary.

How much mortgage can I afford?

A good rule of thumb for determining how much house you can afford is to use the 28%/ 36% rule, which states that you should not spend more than 28% of your gross monthly income on home-related costs and 36% on total debts, which includes your mortgage, credit cards, and other loans like car and student loans.

You can also use an online mortgage calculator to get a more accurate estimate of your mortgage and repayments. 

Tips for first-time homebuyers 

We've put together some advice for first-time home buyers, concentrating on how much money you have now and how much you can manage to pay for a property in the coming years.

  • Planning early for your first home 
  • Prepare for a deposit
  • Know what your dream home looks like
  • Know your budget
  • Look for other opportunities
  • Prepare for disappointments 

Read more about it here: A Step-By-Step Guide On Buying A House In New Zealand

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