ASB, BNZ, Kiwibank drop some lending, term deposit rates ahead of Official Cash Rate announcement

Three banks today announced lower lending rates on some products ahead of next week’s Official Cash Rate (OCR) announcement and after yesterday’s global market rout.

ASB today said it had lowered rates on several of its fixed home lending terms, including a market-leading rate of 6.25% for its two-year term.

The bank dropped its 18-month rate by 20 basis points from 6.69% to 6.49% and its two-year rate dropped 24 basis points from 6.49% to 6.25%.

“Longer-term rates are now all below 6%, with the three- and four-year terms dropping 36 and 30 basis points respectively, now at 5.99%,” ASB said.

ASB said it also lowered its term deposits between 9 months and 60 months by up to 30 basis points.

Kiwibank said it made changes to home loan fixed rates and term deposit rates, effective today.

Changes to six-month, one-year and two-year fixed rates were minor, ranging from 6 to 15 basis points.

But the three-, four- and five-year fixed rates were down 30 basis points from 6.39% to 6.09%.

Kiwibank term deposit rate changes ranged from 10 to 20 basis points.

BNZ said it was also updating some of its term deposit rates from 210-239 day terms up to five-year terms.

The two-year swap rate – which influenced interest rates – recently hit a two-year low, according to Kiwibank economists, leading major banks to lower retail rates.

And Westpac economists have told RNZ they expected the OCR to fall from its current 5.5% to 5% by the end of the year.

Two large banks today announced changes to home loan fixed rates. Photo / Klanarong Chitmung

The next OCR update is due on August 14.

The financial markets are pointing to a chance of a rate cut next week. But most economists are picking November for the first rate cut. Unemployment data due to be released tomorrow is expected to see a rise.

Economists expect that the official unemployment rate rose in the second quarter of the year, with most picking it to land at 4.7%.

That’s up from the 4.3% rate in the March quarter and marginally ahead of the Reserve Bank of New Zealand’s forecast (4.6%).