Red zone mortgage rates slashed

Part of Christchurch's Red Zone. Photo / APN

Banks are slashing mortgage rates for home owners in the Government's earthquake ravaged red zone of Christchurch.

The Government this week divided the city into four coloured zones, including a residential red zone covering about 5100 houses that would not be rebuilt. People who owned property with insurance in the residential red zones on September 3 had two options.

The Crown could offer to buy the entire property at current rating value, less any built property insurance payments already made, and assume all the insurance claims other than contents.

Alternatively, the Crown could offer to buy only the land and homeowners could continue to deal with their own insurer over their homes.

ANZ/National Bank and Kiwibank on Thursday announced home loan discounts of 2.04 per cent and 2 per cent respectively for people in the designated residential red zone.

Westpac and BNZ yesterday said they would offer a variable rate of 3.65 per cent and a discount of 2 per cent respectively.

ASB this week added to an earlier support package that included discounts on variable and fixed loans of 1 per cent 0.5 per cent respectively for existing ASB, BankDirect and Sovereign home loan customers.

David Tripe, a senior lecturer in banking studies at Massey University said there had previously been support packages at times of natural disasters such as floods.

"They're [banks] certainly interested in keeping customers and they want to be seen to be socially responsible," Tripe said. "If you were in that situation you would look twice at a bank that wasn't doing it," he said.

A 2 per cent discount on floating rates seemed like a reasonable offer "which should not be unattractive to people".

Westpac general manager of retail bank Gai McGrath said: "What's really important is this is a circumstance no one could ever have planned for and it's just really important that we don't lose sight of what people in Christchurch have been through and are still going through."

ANZ New Zealand chief executive David Hisco said the announcement by the Government had provided people with the clarity they desperately needed. "This offer demonstrates ANZ's commitment to supporting Christchurch people for the long-haul," Hisco said.

Prime Minister John Key on Thursday welcomed ANZ's $1 billion commitment of special mortgage lending to help homeowners relocate. "It shows that despite the earthquakes, there is business confidence in Christchurch and Canterbury," Key said.

What's on offer

ANZ/National
* 2.04pc discount on variable rate for 1 year for loans up to $500,000.

BNZ
* 2pc discount on variable rate for year for loans up to $500,000.

Kiwibank
* 2pc discount on floating rate for year.

Westpac
* 3.65pc variable rate for 1 year on loans up to $500,000.

ASB
* 1pc discount on variable rate for existing ASB BankDirect and Sovereign home loan customers.

* 0.5pc discount on fixed rate for existing home loan customers.

* 6 month repayment holiday for existing home loan customers.