Why the delay? Here's why your mortgage rate takes time to fall

ANZ cut its floating rate on the back of the Reserve Bank dropping the OCR to 2.5 per cent.

We live in an instant digital world right? Well, not so much when it comes to banking it seems.

Existing home loan customers at New Zealand's major banks will have to wait at least two weeks before they see any benefit from floating rate cuts - and for some it will be the New Year before they get the savings.

All the major banks announced cuts to their floating and variable mortgage rates yesterday after the Reserve Bank dropped the official cash rate from 2.75 per cent to 2.5 per cent.

But while new loan customers can grab the lower rates from as early as today at Westpac those with existing floating mortgages have to wait until December 23 at the earliest and up to January 1 get the low rates.

BNZ spokeswoman Katherine Cornish said the bank had a legal obligation to inform its customers of the rate change and while some were happy to be notified by email others wanted to have a paper copy sent in the post.

She said the time lag allowed people to adjust their automatic payments and was the same timeframe used when rates increased.

"If it was the reverse situation I'm sure people would be quite grateful for the grace period," she said.
The holiday season is also getting the blame for it taking longer at some banks.

Westpac spokesman Chris Mirams said the January 1 switchover date allowed for operational activity and system changes to be made effectively through the holiday period.

While ANZ spokesman Pete Barnao said its effective date had to be moved from December 28 to December 29th because of the Boxing Day public holiday.

"Around 180,000 customers are affected by this rate change. A letter is needed to ensure we reach all of these customers, as not all are signed up for email or text alerts.

"We have followed exactly the same timeframes with falling rates as we did in a rising interest rate environment," he said.

Around 180,000 customers are affected by this rate change. A letter is needed to ensure we reach all of these customers, as not all are signed up for email or text alerts.

ANZ spokesman Pete Barnao

Kiwibank spokesman Bruce Thompson said the system changes required to shift existing customers to a new rate were "quite complex."

"We need to make system changes and also to be consistent. We give advice to customers affected by all rate changes (up or down)."