There have been expectations that floating home loan rates would start easing early next year, in tandem with the Reserve Bank lowering its official cash rate. However the central bank made it clear in its most recent announcement that the date for any easing has been pushed out, and that there may even be another increase before then.
Yesterday's current account deficit has also put the frighteners on economists and they are now strongly suggesting that the Reserve Bank may increase the OCR next month and again in December.
This has promoted the comment that no-one should be planning to go for a floating home loan for a long, long time.
Meanwhile fixed term rates, particularly for shorter terms (six months to two years) have actually been rising due mainly to growing inflation pressures. Again these show little sign of abating in the near term.
An unusual feature of the market at the moment is that there is not the intensity in bank spring campaigns that usually occurs at this time of the year. The ANZ is very active with its holiday promotion, but not many banks have followed suit.
The main development is that last week the Bank of New Zealand launched another of its so-called Unbeatable campaigns, but it is a dull imitation of previous ones. There is no special rate to undercut its competitors, rather it has taken the approach that if another bank beats it on rate, it will match it and give the customer $100.
That's not really a huge incentive, especially if you take out a $200,000 home loan, and the customer has to do all the work.
Also the offer is only valid for rates from BNZ's fellow big bank competitors. It specifically excludes the second tier banks (eg: Bank Direct, Kiwibank and TSB) which have sharp rates and non-bank lenders.
The other noticeable characteristic is that Kiwibank runs a similar offer, the Kiwibank Home Loan Guarantee, although it hasn't been promoting it.
One-year rates now range from the 7.60% offered by Public Trust and Southern Cross to 8.40% from GEM Home Loans.
In the middle of the curve, three-year rates range from BankDirect's 7.25% to Headstart's 8.55%.
At the long end, five-year rates range from Kiwibank's 7.15%, down from 7.25% last week, to GEM Home Loans' 8.00%
