Westpac cuts mortgage rates

Westpac has today cut three of its fixed mortgage rates. Photo / NZ Herald

Three weeks since ASB kicked off competition among banks for the year, Westpac has this morning announced cuts to three of its fixed mortgage rates.

And the bank is encouraging customers to "make hay while the sun shines".

Westpac has reduced its one-year rate from 5.25 per cent to 4.89 per cent, its three-year rate from 5.90 per cent to 5.39 per cent, and its five-year rate from 5.99 per cent to 5.75 per cent.

Late last month, ASB cut three of its fixed home loan rates by 0.15 per cent, while lifting its two-year rate by 0.20 per cent.

Westpac spokesperson Ian Blair said the bank was unsure how long it could sustain the rates for and would be reviewing them weekly.

"Anyone whose mortgage is due to roll over or who is reviewing their current financial position should make hay while the sun shines."

Westpac's one-year rate compares to 5.45 per cent offered by ASB, and 5.25 per cent offered by ANZ, BNZ and Kiwibank.

In the three-year rate market, ANZ is competing with 5.90 per cent, ASB with 5.75 per cent and Kiwibank with 5.65 per cent.

Compared to Westpac's five-year rate, the median amongst the other major bank is 6.5 per cent.

Reserve Bank governor Graeme Wheeler last week kept the official cash rate at 2.5 per cent, but singled out rising house prices as a threat to the country's financial stability.

"The bank does not want to see financial stability or inflation risks accentuated by housing demand getting too far ahead of supply," Wheeler said.

Anyone lending under Westpac's new rates will require a minimum 20 per cent deposit and minimum new loan of $100,000, the bank said.