Mortgage war reignites as Westpac offers 3.99% rate

Could this be the start of another mortgage war? Photo/File photo.

Mortgage brokers say a new sub-4 per cent mortgage rate launched by a major bank could be the start of another mortgage war.

From today Westpac is offering a one-year fixed term rate of 3.99 per cent - down 16 basis points on its standard rate of 4.15 per cent.

The offer is only available until February 1 and is only open to those with more than 20 per cent equity and a have their salary going into a transactional account at the bank.

Karen Tatterson, a mortgage broker with loan market, expected other banks to follow.

"I think they probably will. I think they will probably be inclined to match it."

She said she was also able to get 3.99 per cent from Kiwibank over one year, an offer that had been available since before Christmas.

John Bolton, managing director of Squirrel Mortgages, said he had been surprised to see the Westpac rate but also expected other banks to match it.

"I wouldn't be surprised to see another one come up out with a 3.99 per cent in the next day or two," he said.

Bolton said wholesale rates had fallen recently which had taken the pressure off bank margins after rises last year.

"Wholesale rates have come back a bit."

In November last year, ANZ - the country's largest bank - offered a one-year fixed term rate of 3.95 per cent - the lowest offered by a major bank since just after World War II.

Other banks followed with ASB and Westpac matching it and BNZ offering 3.99 per cent over two years fixed.

But by December 4 three of the four majors had put advertised rates back up over 4 per cent.

Still, the short-term offer appears to have been worth it.

Figures from ANZ show around 15,000 customers took advantage of the special.

"This helped grow our market share in November, contributing to more than $500 million in new home lending," said a spokeswoman for the bank.

She said the offer had made November its biggest month for home lending since August 2016 with total home loan growth 4.5 times higher than around the same period in 2017.

"Calls to our contact centre also spiked 80 per cent in the following days too."

Tatterson said anyone due to re-fix their mortgage in the next 60 days should try and lock in an offer and those who was due to end their fix term in the next six to nine months should also weigh up the cost of breaking their mortgage to re-fix it at a lower rate.

Bolton said even if the other banks didn't match the Westpac rate in their advertised rates it was always worth negotiating to see if they would match it.

"You will find that by and large they match each other."

Bolton said it was hard to predict where rates would be in six months.

"We just don't know. But these are historically low rates. So you have got to operate on the fact they won't last."

Asked if they would be matching Westpac's rate ASB, Kiwibank and ANZ all responded to say that they regularly reviewed interest rates.

An ASB spokeswoman said it took a number of factors into consideration when setting rates, including funding costs and market movements.

"As these and other wider market factors regularly change, we are constantly reviewing their impact on our interest rates and we will continue to make adjustments as required. Our rates are assessed on a daily basis."

A spokesman for BNZ said it didn't have anything to announce at the moment.

"But if you are the market at the moment it's a great time to have a conversation with us.

"It's very competitive out there with lots of deals happening."