Kiwibank one-year rate special "extremely successful"

Kiwibank communications manager Bruce Thompson says while he can't release the figures, the short term promotion was extremely successful and there was temptation to keep going.

He says the special was done because interest rates were static for such a long time.

Thompson says Kiwibank thought it would start 2011 with something new and only do it for a short period because it wasn't related to the wholesale rates.

"We wanted to stir up the market and see what happened, particularly we were interested in new home buyers, those who had maturing loans with other banks, or money on variable loans with other banks.

Comments from our readers

On 4 February 2011 at 11:34 am Tony said:

I wonder how successful this really was and how many homeowners got beneficial advice.
The average 1yr and floating rates with main banks is 6.45%, a difference of .3% or $300pa per $100k of borrowing. It most likely cost them more than they will save in interest over the next 12 months to switch, more importantly I wonder how many of these people refinanced after being 2 or 3 years into their mortgage (now 22 yrs to go etc) and Kiwibank have given them a 25 or worse still 30 yr term in order to meet their servicing criteria and the clients are unaware because they got sucked into focusing on the carrot of a perceived better interest rate.

On 4 February 2011 at 1:05 pm John said:

I agree Tony. Falling into the trap of fixing short term at the moment is the biggest mistake borrowers can make in the current interest rate cycle. Likewise them been offered a 25-30 term when refinancing to Kiwibank means borrowers are going backwards in some instances rather than forwards in trying to pay their mortgage off faster. I hope Kiwibank's fees to reserve an interest rate in advance of maturity were disclosed to ALL these people when they made the move across! I tend to think that this fact wasn’t mentioned as any reasonably smart individual would not be prepared to pay a fee to hold a rate 2 months from maturity when the other banks don’t charge i.e. any saving in the a lower 12 month rate at Kiwibank will be more than offset by the cost to fix again at Kiwibank next time.

Being able to re-negotiate and secure a new interest rate with your bank as far out as possible from your fixed rate expiry (especially in an increasing interest rate environment) is one of biggest savings you can potentially make on a mortgage. Kiwibank now charges its home loan clients to do this, none if the other banks do. Oh well these people who refinanced to Kiwibank will find this out in due course no doubt.

On 4 February 2011 at 1:58 pm Alastar said:

Why on earth would you elect to fix for only 12 months at the moment? Geez, some people think just because the bank is offering up a low rate it's the "smart" thing to do. Typical Kiwi mentality. Thompson's comments about Kiwibank targeting first home buyers with this offer worries me as these people typically can least afford the increases to their fortnightly mortgage repayments that higher rates will naturally bring. If you are a first home buyer currently you need to look at where rates are going to be sitting in 8-10 months time (especially the longer term ones) I am certain that come February next year those who opted to fix for only 12 months will have regretted it. As Tony says is this really beneficial advice from a bank? This seems instead like someone in Kiwibank marketing who doesn’t understand interest rates i.e. not a real banker. Must be a few of those employed there.

On 4 February 2011 at 10:06 pm Stefano said:

I had a fixed rate mortgage with ANZ come up for refixing last Wednesday. I asked them to match the 6.15% for 1Yr and they agreed .... cheers Kiwibank!

I have 8 mortgages with ANZ and have a mix of floating , 1Yr and 2Yr fixes.

On 10 February 2011 at 3:50 pm Nina O'Fyfe said:

What else can you expect from a post office pretending to be a bank?
Surely the current abysmal fiscal state of NZ Post Limited requires a cash injection before it can pump out lending at such low rates.

Kiwibank one-year rate special "extremely successful"

Kiwibank is ending its one-year home loan rate special tonight, hiking it back up to 6.45% after three weeks of having it at 6.15%, matching the floating rate.

Thursday, February 3rd 2011, 4:00PM 5 Comments

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