Kiwibank said reducing its variable loan rates by 50bps will benefit 35,000 home loan and business banking customers.
Both Kiwibank’s variable and offset variable term loans will fall from 8.25% to 7.75%.
Its revolving loan drops from 8.3% to 7.8%.
Competition for mortgage lending has become competitive over the past two months as the major banks repeatedly cut fixed home loan rates.
This has seen mortgage rates drop to below 6% across a number of lending terms.
According to Interest.co.nz, ASB and BNZ have the lowest standard fixed two-year rates among the big five banks at 5.79%.
ANZ is offering a “special” two-year fixed home loan rate of 5.69%.
“The wholesale rates market (measured by overnight index swaps) has 44bps priced into the October decision – roughly 90% chance of a 50bps cut to 4.75%,” Kiwibank economists wrote last week.
“The November decision has another 48bps priced to 4.33%, so that’s most of a 100bps move to 4.25%.”
February was just as interesting with another 45bps priced in already.
“So traders are pricing in ‘odds-on’ bets of 50bps cuts. The cash rate is priced to hit 3% by August next year, with a terminal rate around 2.5%, in line with our forecast.”
The RBNZ cut interest rates in August by 25bps to 5.25% – the first cut since March 2020.
Kiwibank, ASB and ANZ moved swiftly in lowering mortgage lending rates following that decision.
Haggling for a better rate
OneRoof today reported that ANZ had slashed its one-year mortgage rate on the quiet.
ANZ’s one-year discretionary non-advertised mortgage rate was cut to 5.59% for existing and new customers who have at least 20% equity.
However, ANZ’s website advertises fixed one-year mortgages at 6.19% (special) and 6.79% (standard).
Consumer NZ says it pays to haggle to get the best interest rate deal when your mortgage comes up for renewal.
The Commerce Commission’s final report on personal banking, released in August, found discretionary discounting was a common feature of competition for home loans in New Zealand.
“While all banks advertise headline interest rates, the actual home loan interest rates that an individual consumer may be offered can vary significantly from these headline rates,” the report noted.
“Actual offers depend on a customer’s personal and lending characteristics and how effectively they engage with lenders to shop around... consequently, consumers need to be cautious of making decisions based on quick comparisons of headline interest rates from the major banks and be aware of the practice of discretionary discounting and how to effectively shop around to help negotiate a lower rate. Otherwise, our analysis that follows suggests consumers risk financial loss if they decide to engage with the market on headline rates alone.”