Then comes the 18-month, the 4-year, and the 5-year.

The smallest discounts are on the 2 and 3-year rates.

Why do some interest rates get bigger discounts?

Most banks decreased their 2 and year 3-year rates about a month ago.

Since they recently lowered the rate, they’re unwilling to give as much discount. Makes sense.

But most banks haven’t changed their 1-year rates for 3 months. So they’re more willing to give a discount.

In today’s market … the longer a bank has kept its interest rate steady, the more room there is for a discount.

However, it’s hard to find this information online.

So Ed (our economist) created this page to show you can see when each bank last updated their interest rates.

Screenshot 2024 02 08 at 10 57 50 AM 1

Why offer a discount – why don’t the banks just drop the rates?

Some brokers say that Adrian Orr wants banks to keep their rates high.

That’s not my take. I don’t think the Reserve Bank governor is waving a big stick at the banks.

Wholesale rates are on the way down.

It costs the banks less to borrow money and lend it to us for a mortgage. So, their margins are increasing.

But, the market is uncertain. We don’t know when the Reserve Bank will start bringing the OCR down.

And there are costs when the banks change their interest rates. They need to launch new campaigns and update their marketing.

They don’t want to drop the 1-year rate today only to increase it next week.

So, the banks are holding off until the picture becomes clear.

It’s cheaper and easier for the banks to offer a discount before making a move.

But my mortgage broker didn’t get me those rates!

If you got a mortgage a month (or two) ago, you might think, "Hang on, my mortgage broker didn’t get me these big discounts.”

Interest rates (and their discounts) change day to day.

So, these are the discounts my brokers could get last week. But that doesn’t mean they were available a month or two ago.

Similarly, they might not be available in a month or two.

So don’t walk into the bank and say, “Andrew Nicol says I can get 0.43% off the advertised 1-year rate … where’s my discount?” ... It doesn’t work that way.

Instead, use this to get a general idea about what discounts are happening.

If you need a (good) mortgage broker, give my team at Opes Mortgages a ring.

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Andrew Nicol

Managing Director, 20+ Years' Experience Investing In Property, Author & Host

Andrew Nicol, Managing Director at Opes Partners, is a seasoned financial adviser and property investment expert with 20+ years of experience. With 40 investment properties, he hosts the Property Academy Podcast, co-authored 'Wealth Plan' with Ed Mcknight, and has helped 1,894 Kiwis achieve financial security through property investment.

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