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Mortgage Rates Daily Commentary
Thursday 6 August 2020  Add your comment
The Co-operative Bank slashes home loan rates

More rate cuts to report this morning, as The Co-operative Bank cuts three, four and five year rates. Its three year rate at 2.79% is level with the big four. Check out the latest rates here.

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Mortgage holders question banks on rate cuts

Mortgage holders are questioning why their banks are making them wait between two and three-and-a-half weeks to pass on Reserve Bank governor Alan Bollard's cut in official interest rates to their floating home loan rates.

Wednesday, March 23rd 2011, 12:14PM 14 Comments

by Jenny Ruth

Bollard cut the official cash rate (OCR) from 3% to 2.5% on March 10.

Kiwibank passed on Bollard's cut to new customers taking on floating-rate mortgages immediately but its existing customers with floating rate mortgages have to wait until March 28.

The four major Australian-owned banks took between one and four days to pass on the cut for new customers but their existing customers have to wait until March 24, in the case of BNZ, and up to April 4, in the case of ASB Bank.

One site reader, who describes herself as a disgruntled ANZ Bank customer, questions whether the banks are taking the opportunity to profiteer at their customers' expense.

ANZ passed on the cut to new customers on March 12 but won't pass on the cut to existing customers until March 28. Interestingly, the ANZ-owned National Bank didn't pass it on to new customers until March 14 and its existing customers have to wait until March 29.

"The National Bank and ANZ operate on two different systems with differing system constraints around rate-change timings," says ANZ National spokeswoman Lyn Holland.

Another reader says he emailed his bank manager as to why his bank, Westpac, wasn't passing on the cut until March 31. "He never replied - probably too embarrassed. Now he has his out-of-office on."

Yet another says: "Banks should drop floating rates immediately the change is announced. The floating rate should be just that - floating."

One reader says: "I reckon its just a money grab. They know that no one will bother refinancing if they are getting the lower rate in about a month's time."

All the banks say it's a matter of the constraints of their systems and the requirement to give their customers notice. Customers experience exactly the same delays where the OCR rises, they says.

BNZ spokeswoman Emily Davies' response is typical: "The CCCFA (Credit Contracts and Consumer Finance Act 2003) regulations require existing customers to be notified of any changes to their repayments within five working days of the change.

"While we can put new customers on the changed rate straight away, we need to allow a reasonable timeframe to inform existing customers. Our process is identical for any mortgage rate change," Davies says.

Which is unlikely to satisfy the complainers: "Unfortunately, it's all connected with legal issues and the banks like too hide behind them," says one site reader.

 

New Customers
Existing cust'rs
Rate
Old rate
ASB
March 11
April 4
5.75%
6.30%
ANZ
March 12
March 28
5.74%
6.20%
NBNZ
March 14
March 29
5.74%
6.24%
BNZ Total Money
March 11
March 24
5.59%
6.10%
Westpac
March 11
March 31
6.24%
6.74%
Kiwibank
March 10
March 28
5.65%
6.20%

 

« ASB's mortage book shrinks for a third successive quarterRBNZ considers LVR restrictions »

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Comments from our readers

On 24 March 2011 at 8:12 am Bren Anderson said:
Hmmmm....so they take that long to pass on the rate cut. But i noticed that they took a considerably less amount of time to cut the rate of my savings account so I am on a much lower rate of interest already!
On 24 March 2011 at 8:49 am Joel said:
As an exisiting Westpac customer I don't understand why there is not more focus why their floating rate is at least half a percent higher than that of all the other major banks. I've emailed them a number of times about this through their website (getting back a standard automated message stating that they will get back to me within two working days) but they never actually do get back to me on this. I feel as though Westpac are continually profiteering from the cuts in the OCR
On 24 March 2011 at 9:12 am Nigel said:
This isn’t new news BNZ has always taken 2 weeks to reduce my rate. They write to inform me of the change first.

I don’t have a problem so long as it’s the same policy on the way up. If you hound them now to make the change immediate then it will hurt consumers as the next moves in rates are most likely going to be up.
On 24 March 2011 at 9:28 am KiwiCJ said:
I bet these customers don't complain when rates go up and the same approach is used by the banks.
On 24 March 2011 at 9:36 am Channa said:
Unfortunately, it is the legal requirement, Customers are only worried when they do not get the lower rate on the spot, But this is the same procedure flowed when they increase the rates, Existing customers will enjoy the lower rate for the same amount of period than a new customer having their rate on a higher rate. No one complains when they have the benefit.
On 24 March 2011 at 11:22 am Andrea said:
The banks should provide information to the customers exactly how the cost of funds works and then people would understand why. Its not simply a matter of flicking a switch in the system. If banks were transparent in this process and had well informed staff who could explain this. I work in a bank and the legal requirements are a minefield.
On 24 March 2011 at 11:22 am arty said:
I have mortgage with ASB. I have to wait until April 4th for the rate drop to kick in. I don't believe it takes ASB 3 weeks to 'inform' customers of a rate change. By keeping an eye on the media, most floating mortgage holders are already well aware of rate increases and decreases before their banks 'inform' them.
If the ASB takes less than 3 weeks to pass on the next rate increase I'll be looking for another lender.
On 24 March 2011 at 11:50 am Serge said:
"KIWIBANK it is ours" - we rip you off with style, you will not even notice rather than with the other banks -)
On 24 March 2011 at 12:10 pm Alastar said:
People stop blaming the banks for not passing on the cuts to floating mortgage rates sooner. The Credit Contracts and Consumer Finance Act 2003 introduced by the Government of the day was designed to stop finance companies etc raising interest rates on consumers without notifying them in writing first. Naturally this ruling extended to banks also. Of course as is the usual case in New Zealand with poorly worded legislation politicians didn’t “think” to include an amendment so that lenders didn’t have to notify borrowers in writing when interest rates fell. If you want to see a change to the current law as it stands lobby your local MP. There is no point moaning to your bank about it. The Banks are just following the legal requirements of the law that Parliament introduced.
On 24 March 2011 at 11:36 pm Rachel said:
Westpac make existing customers wait the longest and they have the highest rate. One loan is fixed and one is floating I want to change banks but it is going to cost $7k in break costs :((
On 25 March 2011 at 9:12 am TUT TUT said:
Ever since I can remember whenever the ASB moved floating rates up or down there was always at least a 3 week delay before implementation. I'm sure that all the whiners here won't say Boo in the future when the interest rates go backup and there is the same amount of delay. Oh! look the ASB have just dropped their 18 month fixed rate to 6.00%, I think I'll fix my floating loan and it will take effect immediately. Thank you ASB
On 25 March 2011 at 12:25 pm Liz said:
People get annoyed when the banks take time to pass on interest rate decreases or quickly pass on interest rate increases(as happens with some) so the only point that needs to be stressed is that ALL banks should be CONSISTENT with their time frames when they apply any increase or decrease. I'm sure whilst consumers complain about NOT getting the decreases quickly on the flip side, consumers would also complain about getting increases quickly.
On 25 March 2011 at 4:18 pm Alastar said:
Well whilst we are on the subject of banks and interest rates people might like to know that Kiwibank & AMP charge their home loan customers a 4.18% low equity premium at 94+% borrowing on mortgages of $600,000+ Other banks comparison charge only 1% at this level of borrowing! I have just had a young couple in my office that were going to be forced to pay $25,811 with Kiwibank/AMP for a home loan with them paying $650,000 for a property in Auckland and borrowing 95%. The same loan written through ASB Bank by comparison will cost them $6,175 or if they go to Westpac they’ll pay a margin on their interest rate instead until they can demonstrate sufficient equity in the property.

Bottom line people if you are a 1st home buyer or have less than 20% deposit DON’T go to Kiwibank or AMP for your home loan. Their low equity fees are substantially higher than ANZ National Bank, BNZ, ASB and Westpac. It would be nice if a journalist came out and did a story on this discrepancy between Kiwibank/AMP and the other banks as I am sick to death of Kiwibank been portrayed in the media as the “cheapest bank” when for most borrowers now it’s completely the opposite! How about some transparency?

P.S For those that don’t know the AMP Home Loan product is underwritten by Kiwibank hence AMP have the same low equity fees as Kiwibank above 80% borrowing for their home loans.
On 30 March 2011 at 10:54 am anon 2 said:
nice comment Alastar.

I guess the real story there is making sure customers understand the true value of advice.
Commenting is closed

 

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 ▼2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼3.15 3.29 ▼3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 5.50 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 ▼3.85 ▼3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.55 2.65 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac ▼3.39 3.45 ▼2.99 ▼3.35
SBS Bank 4.54 3.09 3.19 3.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.59 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 ▼2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 ▼3.29
TSB Bank 5.34 3.35 3.49 3.79
TSB Special 4.54 2.55 2.69 2.99
Wairarapa Building Society 4.99 3.65 3.69 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.12 3.19 3.14

Last updated: 6 August 2020 8:24am

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