TSB bank moves to drop home loan rates ahead of Official Cash Rate decision

TSB Bank has moved early and dropped its fixed one-year home loan rate ahead of the Reserve Bank's monetary policy statement. Photo / Tara Shaskey

Ahead of the Reserve Bank’s decision on the official cash rate tomorrow, TSB Bank has moved in dropping one of its home loan rates.

The bank has cut its one-year fixed home loan rate to 5.35% a year, which it said was a lower advertised rate than all the major banks on this term.

TSB Bank is also cutting its six-month rate to 5.89%, its 18-month rate to 5.49% and its two-year rate to 5.29%

General manager of customer delivery Penny Burgess said she was pleased to offer relief to New Zealanders in what’s been a tough year.

TSB Bank made a similar move in October 2024, when it cut its advertised one-year fixed rate below 6% before the big four banks.

The new rates are available from today.

ASB last week cut rates on some of its mortgage terms.

ASB last Wednesday said its 6-month term dropped 10 basis points to 5.89%, the 1-year rate dropped from 5.54 to 5.49% and the 18-month term was dropping 15 basis points to 5.19%.

OCR decision tomorrow

With a 50-basis-point cut to the Official Cash Rate expected this week, market attention will turn to how much lower the Reserve Bank thinks it can go.

The Reserve Bank is expected to cut the Official Cash Rate (OCR) from its current 4.25% to 3.75% with the release of its first monetary policy statement at 2pm on Wednesday.

“The big interest for markets is what the bank will intimate about its future rate track,” BNZ head of research Stephen Toplis said.

The Reserve Bank will have to weigh the ongoing sluggishness of the economy against concerns about the potential for inflation to reignite.

“In our opinion, it should publish a quicker decline in rates than it did back in November,” Toplis said.

Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.