What the series measures
This is the average 2-year fixed interest rate that New Zealand's banks advertise to new borrowers for a first mortgage on a home. The Reserve Bank collects each bank's standard rate, the one printed on its rate card, at the end of every month and publishes the simple average in table B20, with floating, capped and the other fixed terms beside it. This page follows the 2-year column, whose history runs unbroken from December 2004.
What it includes and leaves out
The series is an average of advertised rates, not of rates people actually paid, and every bank counts equally whatever its share of lending.
It also leaves out special rates. Banks offer lower rates to borrowers who meet conditions, such as at least 30% equity in the home in the Reserve Bank's own example, and they publish those separately from their standard card. The Reserve Bank records special rates in table B21, which starts in 2017. If you have a good deposit, a special rate is often the one you will be offered, so expect your quote to sit below this line rather than on it.
Fees, cashback offers and any discount you negotiate are outside the series too.
How fixed rates are priced
A bank funds a 2-year fixed loan at roughly the 2-year wholesale swap rate and adds a margin. The swap rate depends on where markets expect the Official Cash Rate to be over the next two years, so this series often turns before the OCR does: it rises when the market expects increases and falls when it expects cuts. Floating rates, by contrast, follow the OCR itself.
How much you can borrow is limited by the Reserve Bank's loan-to-value and debt-to-income restrictions, and each bank applies its own affordability test on top.
How to compare it with your quote
Start with the right column. If your bank offers you a special 2-year rate, compare it with table B21 rather than this series; if you have been offered the standard rate, this series is the fair benchmark.
Then work in dollars. A difference of a quarter of a percentage point looks small, but on a large loan it changes every repayment. Put both rates into the mortgage calculator with your loan amount and term, and check that the repayment fits your budget in the debt-to-income calculator. If you are weighing buying against renting, the rent vs buy calculator takes the same rate.
Remember that a 2-year fix covers only two years of a loan that may run thirty. When it ends you refix at whatever rates are on offer then, so test a higher rate as well as the one you are quoted.
Reading the chart and the table
Each point is one month: the average rate on the last day of that month, dated the first of the month, as the Reserve Bank publishes it to two decimal places. The chart joins the months with a line, and the table lists them newest first with the change from the month before. Each refresh reloads the whole series from the Bank's workbook, so a revised month is picked up too.