Mortgage wars

One of the few positives about the current state of the economy is that interest rates have remained low, and seem likely to in the near future; good news for those with mortgages, but not so good for those looking for a good rate of return on their investments.

But as the Herald reports this morning, there's plenty of healthy competition between the banks at the moment:

Mortgage rates have hit rock bottom as banks offer thousands of dollars in cash and slash advertised interest rates in response to pressure from home-buyers for deals.

A mortgage broker has described the market as "frantic" and "the best it's ever going to get" after negotiating rates as low as 4.75 per cent for clients.

"Banks are cutting each other's lunch. They are incredibly good rates ... but these kinds of deals are not sustainable the more people jump on the bus."

Advertised fixed-interest rates on home loans are at historic lows, but customers can save thousands more dollars by haggling for even lower rates. The Herald has spoken to new home-owners who negotiated large cash bonuses and heavily reduced rates.

One, who asked not to be named, was given cash as well as a 4.9 per cent one-year rate after asking ANZ to match Kiwibank's 4.99 per cent offer.

Another couple switched from ASB to ANZ after being offered $2000 in legal costs and cash back and 0.5 per cent off the advertised floating rates.

We had a productive meeting at the bank yesterday where we were pleased to discover that merely by paying a few dollars extra each fortnight on the half of our mortgage which is fixed, we have taken a couple of years off the term. Given that we had budgeted for a rise in the floating rate in that period (which we're not allowed to pay extra on), we've upped the rate we will pay, and hope to be able to shorten the term even further. When that half comes up for review in a few months, we'll hope that rates are still low, and quite possibly lock it in for a little longer.

We're sure that there are plenty of other people in the same situation as we are, who are enjoying the chance to clear some debt, and we're equally sure that the banks will continue to be aggressive in trying to secure new business. Rod Emmerson has an amusing visual take on it:

Now; if only we could find out which bank is offering a new set of golf clubs; perhaps we could be persuaded to move our business!