By GARETH VAUGHAN
A banking war over two-year fixed home loans is only the beginning of a new level of competition, says a top executive of one bank.
Superbank chief operating officer James Munro says: "I think it is going to get increasingly competitive.
"Probably right across the retail banking landscape what we're going to see through next year is increased competition on every product line, including cards and transaction accounts."
He says his staff are calling the BNZ-led battle for two-year fixed home loan business "bank wars".
BNZ has pledged to beat any two-year home loan rate offered by major rivals on loans taken up by December 17.
ASB today starts Fastsaver, a savings account for electronic customers that will compete with Superbank's Supersaver.
And Superbank will offer a variable mortgage option with a maximum interest rate of 7.49 per cent.
Since launching its "unbeatable" campaign on October 11, BNZ has cut its two-year home loan interest rate to 7.15 per cent from 7.4 per cent.
ANZ and ASB Bank offer 7.2 per cent, the National Bank 7.3 per cent and Westpac 7.5 per cent.
Among the smaller banks Kiwibank's rate is 7.5 per cent, HSBC 7.4 per cent, BankDirect 7.2 per cent and TSB Bank 7.19 per cent.
Andrew Whitechurch, BNZ's general manager of business development and strategy, said the bank needed to be competitive in a slowing housing market.
Reserve Bank figures show monthly home loan lending fell below $1 billion in August for the first time in a year.
Because it stopped using mortgage brokers and paying their commission in May last year, BNZ had lower costs, helping it undercut rivals, Whitechurch said.
David Tripe, senior banking lecturer at Massey University, said BNZ had 15.9 per cent of the mortgage market at June 30.
ANZ National had 35.5 per cent, ASB 22.5 per cent and Westpac 20.4 per cent. Next was HSBC with 3.1 per cent.
ANZ National Bank managing director Sir John Anderson dismissed the mortgage price war as a "blip" and "a little bit of playing around in the market".
Whitechurch retorted that rivals' were "eating Sir John's lunch".
Tripe said broker costs were a "quite substantial" near 1 per cent of total loan values, and BNZ's margins on its two-year loans were "extremely fine".
Whitechurch said BNZ was making a very small profit, but suggested rivals paying brokers and offering loans at 7.2 per cent would not be profitable.
Rivals suggest there is more to a loan than price.
The National Bank is offering customers' a year's house and contents insurance, and ANZ $500 towards legal fees.
ASB spokeswoman Barbara Chapman said her bank would negotiate for customers and match rivals' offers, and Munro said Superbank would match or beat rivals' offers.
Westpac spokesman Paul Gregory played up his bank's "quality proposition".
Banks get ready for battle
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