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TSB drops two-year fixed rate

TSB Bank has reduced its 2 year fixed-rate home loans to a nationwide low of 5.99%.

Thursday, June 18th 2009, 8:57AM

Managing director Kevin Rimmington said the bank remained unaffected by the comings and goings on worldwide financial markets – and was determined to pass the benefits of this on to New Zealanders.

“TSB Bank’s ownership, funding and investment strategy means it has been effectively shielded from the flow-on effects experienced by many of the multinational banks.”

“All our funding is obtained from within New Zealand – we rely on the deposit support of our customers. Right now, we’re experiencing record levels of funds growth.” Rimmington said

TSB Bank’s investment strategy had always been somewhat conservative - and largely home loan focused.

“Most of our investments, up to 65% of our assets in fact, go into providing home loans to every-day New Zealand families. We’ve been doing so for more than 150 years, now – this rate reduction is simply continuation of that commitment.”

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Latest Trends
Fixed rates step into spotlight

The gap between floating rates and fixed rates is closing in. This is because floating rates have been increasing in synch with the last two Official Cash Rate (OCR) increases of 25 basis points, making an increase of 0.50% since June. At the same time there has also been a fall in two to five year fixed rates due to the decline in wholesale and swap rates.

Whereas six months ago the "step up" between floating and two-years fixed was around 1.60%, at the moment it stands at around 0.60%.

This means at the moment you would only need to see a small rise in rates for the fixing strategy to be the better option, especially for terms between one and two years.

 

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Disclaimer: Every possible effort has been made to keep the information in the rates tables as accurate as possible, however, neither the publishers of Mortgage Rates nor anyone engaged to compile these tables accept any liability for inaccuracies or any loss suffered as a result. It is strongly advised that readers check loan details directly with the provider concerned.

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