KEY POINTS:
Kiwibank's decision to cut its key lending rate despite a hold on rates from the Reserve Bank has not been followed by the main trading banks.
State-owned Kiwibank said yesterday it was cutting its two-year lending rate to 9.29 per cent from 9.60 per cent with the proviso that borrowers have 20 per cent equity in their purchase. Chief executive Sam Knowles said Kiwibank was able to cut the rate because, unlike the major trading banks in New Zealand, it was funded by domestic deposits and was therefore not so impacted by the global credit crunch.
Other bank two-year rates are mostly around 9.60 per cent, although BNZ's rate is at 9.50 per cent. "They seem to be wavering on how long they are going to be remaining on hold."
Knowles said that after Bollard's statement his bank was able to put a "fairly aggressive rate in the two-year space".
"He was effectively signalling that rates will come down at some point, although not in the shorter term."
"It's all very subtle stuff. He took away the word 'significant' and that made the difference in the sense of saying there is a chance rates will be coming down.
"That's really just confirmed the way the market is thinking anyway."
- NZPA
