Bank switching surged in December, as those with mortgages appear to have shopped around for cheaper debt at a record rate.
Just over $2 billion of mortgage debt changed hands between banks and non-banks during the month - a record amount since at least 2017 when Reserve Bank records began.
NZ Herald Wellington business editor Jenee Tibshraeny explains further.
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Speaker 1 (00:00):
Crayon Bridge.
Speaker 2 (00:02):
You're on News Talk CB. It is seventeen after six.
It seems the mortgage wars are on. People are increasingly
shopping around for a better mortgage rate. Bank switching has
surged in December. Genete Training is The Herald's Wellington Business editor.
Good evening, Hey Ryan, Nice to have you on Janey.
How much is being moved around here?
Speaker 1 (00:22):
Well, in December, which is the month that we have
the latest dart available for two billion dollars of mortgage
debt changed hands between banks and non banks. So that
is actually a record amount since at least twenty seventeen
when the Reserve Bank started publishing the start. Now, if
you look at that two billion dollars as a proportion
of all the new mortgage mortgages written during the month,
(00:47):
that makes up twenty five percent of that sum. So
you know, in dollar terms and in percentage terms, that
was really significant. I mean yeah, for the month of December. Now,
now we had seen it in prior months similarly large
sums of money switch hands between between banks and non banks.
(01:08):
Now the Reserve Bank data, doesn't you know, give you
a reason for exactly what was going through borrowers minds
and why they were doing it. But I talked to
loan market mortgage advisor Bruce Patten earlier today and he said, basically,
people were chasing chasing lower infrast rates. So you know,
they were happy to pay in some instances, happy to
pay break fees at their bank and give back any
(01:31):
cash incentive that they received from the bank. They were
happy to do that to get a better deal from
a from a different bank.
Speaker 2 (01:38):
Right, And do we know where they're coming from and
where they're going to? What does the data not get
that into that kind of detail.
Speaker 1 (01:44):
Yeah, the data doesn't get into that kind of detail.
Another factor I think with this is that it has
been easier for people to switch bank because people have
been fixing their mortgages at really short terms like six
months or year. A lot of people have also been
putting their mortgages on floating rates. So actually in November,
(02:06):
which is the month where the newest data for nearly
half of new mortgage debt was floating. So you know,
if you if a lot of your mortgage is floating
on a shorter term, a lot of it will expire.
You know, it's easier to get it all to mature
at the same time, so you could shift the whole
lot to a new bank, you know, because you can't
shift part of your mortgage for a new bank and
keep part of it at the old bank.
Speaker 2 (02:28):
So I think that unless you want to cut your
house up, of course.
Speaker 1 (02:32):
Exactly exactly, so, you know, I think that that that
has definitely made it easier for people to shift than
if you were, say, locked in for two years and
you couldn't move because you had two years to go
or something like that.
Speaker 2 (02:44):
Interesting, So that might explain some of the big the
big shift that's going on. Are the banks offering Are
they being competitive?
Speaker 1 (02:52):
Well, you know, that's that's the big question at the moment.
Bruce Patton thinks it's not not not too competitive with
those rates. You know, banks are maintaining their profit margins,
so they're cutting as much as they can, but their
shareholders are certainly happy, you know, those bank profits have
remained elevated. I had wondered as well, whether perhaps people,
(03:14):
you know, because there's been so much chat about bank
competition and so on, I had wondered whether people who
had gone to the mortgage brokers and said, oh, there's
all this you know, chat on social media and in
the news about bank competition. Can you get me a
better deal? But again it's hard to sort of get
sort of firm data on that. But Bruce said, you know,
people are all over social media on this stuff. So
(03:35):
if they're in chat groups and they're on Facebook and
they're all chatting about where the best deals are, you
know that does prompt a bit more engagement than there
would have been. You know back in the day before
you could talk about your mortgage rate with your mates
online or with strangers in many cases.
Speaker 2 (03:52):
Exactly to the thank you for that fascinating stuff. Jane Shriney,
New Zealand held Wellington Business Editor where us talking about
the switcherou that's going on as people try and get
better deals, and so they should and it is good
that people talk about it. You know, in the workplace
when they say don't tell your colleague what you get paid,
because then you'll all start a revolution, it's not that
(04:14):
rule does not apply outside of the workplace. When it
comes to your mortgage. You should tell people what your
rate is, and you should tell your friends, and you
should join these websites and there's groups now where you
can go on and tell people your branch, your bank,
and what your mortgage interest rate is, and then the
people who live in your neighborhood can go, well, excuse me, Barry,
I happen to know that you've given this person this rate,
(04:38):
and therefore you should give me the same rate. For
more from Heather Duplessy Allen Drive, Listen live to news
talk sai'd Be from four pm weekdays, or follow the
podcast on iHeartRadio
Crayon Bridge.
Speaker 2 (00:02):
You're on News Talk CB. It is seventeen after six.
It seems the mortgage wars are on. People are increasingly
shopping around for a better mortgage rate. Bank switching has
surged in December. Genete Training is The Herald's Wellington Business editor.
Good evening, Hey Ryan, Nice to have you on Janey.
How much is being moved around here?
Speaker 1 (00:22):
Well, in December, which is the month that we have
the latest dart available for two billion dollars of mortgage
debt changed hands between banks and non banks. So that
is actually a record amount since at least twenty seventeen
when the Reserve Bank started publishing the start. Now, if
you look at that two billion dollars as a proportion
of all the new mortgage mortgages written during the month,
(00:47):
that makes up twenty five percent of that sum. So
you know, in dollar terms and in percentage terms, that
was really significant. I mean yeah, for the month of December. Now,
now we had seen it in prior months similarly large
sums of money switch hands between between banks and non banks.
(01:08):
Now the Reserve Bank data, doesn't you know, give you
a reason for exactly what was going through borrowers minds
and why they were doing it. But I talked to
loan market mortgage advisor Bruce Patten earlier today and he said, basically,
people were chasing chasing lower infrast rates. So you know,
they were happy to pay in some instances, happy to
pay break fees at their bank and give back any
(01:31):
cash incentive that they received from the bank. They were
happy to do that to get a better deal from
a from a different bank.
Speaker 2 (01:38):
Right, And do we know where they're coming from and
where they're going to? What does the data not get
that into that kind of detail.
Speaker 1 (01:44):
Yeah, the data doesn't get into that kind of detail.
Another factor I think with this is that it has
been easier for people to switch bank because people have
been fixing their mortgages at really short terms like six
months or year. A lot of people have also been
putting their mortgages on floating rates. So actually in November,
(02:06):
which is the month where the newest data for nearly
half of new mortgage debt was floating. So you know,
if you if a lot of your mortgage is floating
on a shorter term, a lot of it will expire.
You know, it's easier to get it all to mature
at the same time, so you could shift the whole
lot to a new bank, you know, because you can't
shift part of your mortgage for a new bank and
keep part of it at the old bank.
Speaker 2 (02:28):
So I think that unless you want to cut your
house up, of course.
Speaker 1 (02:32):
Exactly exactly, so, you know, I think that that that
has definitely made it easier for people to shift than
if you were, say, locked in for two years and
you couldn't move because you had two years to go
or something like that.
Speaker 2 (02:44):
Interesting, So that might explain some of the big the
big shift that's going on. Are the banks offering Are
they being competitive?
Speaker 1 (02:52):
Well, you know, that's that's the big question at the moment.
Bruce Patton thinks it's not not not too competitive with
those rates. You know, banks are maintaining their profit margins,
so they're cutting as much as they can, but their
shareholders are certainly happy, you know, those bank profits have
remained elevated. I had wondered as well, whether perhaps people,
(03:14):
you know, because there's been so much chat about bank
competition and so on, I had wondered whether people who
had gone to the mortgage brokers and said, oh, there's
all this you know, chat on social media and in
the news about bank competition. Can you get me a
better deal? But again it's hard to sort of get
sort of firm data on that. But Bruce said, you know,
people are all over social media on this stuff. So
(03:35):
if they're in chat groups and they're on Facebook and
they're all chatting about where the best deals are, you
know that does prompt a bit more engagement than there
would have been. You know back in the day before
you could talk about your mortgage rate with your mates
online or with strangers in many cases.
Speaker 2 (03:52):
Exactly to the thank you for that fascinating stuff. Jane Shriney,
New Zealand held Wellington Business Editor where us talking about
the switcherou that's going on as people try and get
better deals, and so they should and it is good
that people talk about it. You know, in the workplace
when they say don't tell your colleague what you get paid,
because then you'll all start a revolution, it's not that
(04:14):
rule does not apply outside of the workplace. When it
comes to your mortgage. You should tell people what your
rate is, and you should tell your friends, and you
should join these websites and there's groups now where you
can go on and tell people your branch, your bank,
and what your mortgage interest rate is, and then the
people who live in your neighborhood can go, well, excuse me, Barry,
I happen to know that you've given this person this rate,
(04:38):
and therefore you should give me the same rate. For
more from Heather Duplessy Allen Drive, Listen live to news
talk sai'd Be from four pm weekdays, or follow the
podcast on iHeartRadio
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