Lowest Fixed Home Loan Rate: What Does It Mean For You?

Jan 13, 2021
By Staff writer

Just recently, Westpac has dropped their fixed home loan rate to 2.29% for a one-year fixed-term. This is eligible for Kiwis who have a 20% deposit, granted that they will live in the house they bought. As of today, this is one of the lowest rates in the country.

Rates from leading banks in NZ are 2.49% for ANZ, ABS, and BNZ, while it's 2.55% for Kiwibank. Heartland Bank has the lowest home loan rate for one-year fixed loans at 1.99%. Other banks are expected to reduce their rates as well. But, is this any better for you?

What does this really mean for normal homebuyers? Will this affect how long you’ll have to pay off your mortgage? Here’s what you need to know about low fixed home loan rates from the leading banks in New Zealand.

This home loan rate is ideal if you intend to live in the property

If you intend to use the home as your permanent residence, a low fixed home rate is a great choice. If you only plan to buy the home to sell it later on, it may be a costly option.  There may be break free costs. Otherwise, a low fixed home loan rate is ideal as you know exactly how much you’re going to pay over a certain period.

It gives you plenty of choices

The great thing about fixed home rates is competition. Banks tend to lower their rates so more people take advantage of their rate. Plus, you can lock in lower rates even if the market interest rates are increasing. This means you can set a budget for your mortgage payments and know when the term will actually end.

It counters high house prices

House prices in New Zealand, especially in cities, are expected to rise as much as 13-16% in just the next few months. To encourage regular Kiwis to start their homeownership journey, banks drop their fixed home loan rate. This is also beneficial for Kiwis that are paying for their mortgage. This can lower the interest in their mortgage, which can help them save money.

It may come with other associated fees

While a low fixed home loan rate is great for a lot of reasons, it can put you in financial troubles later on. Associated fees such as mortgage brokerage fees and break fees often come with low-interest rates. Before finalising your contracts, make sure to check the fine prints for any hidden costs.

Low fees don’t equal to a better deal

Low fixed home loan rate doesn’t mean it’s a better deal. The rate may not be best for your financial situation, cost of living, and more. It may just lead you to pay astronomical costs later on. Sometimes, a slightly higher fee can be a better deal if it actually fits your needs rather than get tempted by the low rate.

Make sure you have the best fixed home rate loan that matches your needs. Get tailored mortgage rates from the leading banks in New Zealand. Use our comparison tool right here at glimp.

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