ANZ has also announced a range of other fixed-rate changes including cutting its one-year fixed-rate special to 5.29%.
Earlier Wednesday afternoon, the bank passed on the full 50bps cut to its floating and flexible home loan customers, bringing the new rates to 6.89% and 7% respectively.
Grant Knuckey, ANZ NZ managing director for personal banking, said the cuts to fixed and floating rates will provide extra relief and some certainty for customers who have yet to fix their home loans.
“Interest rates have fallen significantly in a relatively short period – 175-basis points of Official Cash Rate cuts since August last year – and that rapidly changing environment can be challenge to navigate,” he said.
“One thing that has been notable about this interest rate cycle is the number of customers staying for longer on floating rates or moving to short-term fixed rates.”
Knuckey said around 12% of ANZ home loan accounts are on floating rates, which was higher than usual.
He said by the end of this year, around 86% of customers with a fixed interest rate higher than 6% will roll on to lower rates.
“Borrowers could potentially see 100-basis points or more coming off their home loan interest rate when they refix,” Knuckey said.
Major banks drop mortgage rates
Following the OCR announcement, ASB sliced 50bps off its variable and business loan rates.
ASB’s variable home loan rate will drop to 6.89% while its back my build rate will fall to 4.44%.
BNZ cut its floating rates by 50bps with its standard variable rate dropping to 6.94%.
Westpac only passed on 40bps to its floating home loan rates, cutting its Choices floating rate to 6.99%. But the bank did shave a bit off its fixed-term rates.
The biggest of these cuts was its three-year rate dropping by 40bps to 5.39% (special) and 5.99% (standard).
Kiwibank’s variable home loan rate will also fall from 7.25% to 6.75% as of Monday for new lending and March 10 for existing loans.
Among the smaller banks, The Co-operative said it would pass the full 50bps cut through to its floating home loan rate and drop it to 6.45%.
Many of the banks also trimmed term deposit rates.
ANZ said it was cutting its term deposit rates by between 20 and 40bps across most terms.
Going below 5%
Two weeks ago Westpac became the first major bank to drop one of its fixed-term rates below 5% in recent years.
The bank’s special three-year fixed home loan rate was cut by 60bps to 4.99%.
However, Infometrics chief forecaster Gareth Kiernan told RNZ it was not a sustainable rate and seemed designed to get a bit of market share for a term that banks did not generally compete on much or had a lot of business in.
“Although there might be some cuts by the other banks to their three-year rates, I generally wouldn’t expect them to go as low as Westpac with their advertised or carded rate,” Kiernan said.
