Kiwibank is offering a limited time six-month home loan rate of 4.99%.
The six-month special rate requires a property owner to a have a minimum of 30% equity in the property, otherwise the bank's standard six-month rate of 5.65% applies.
Kiwibank chief executive Paul Brock said it is by far the lowest rate ever offered by the bank and significantly under cuts the other main banks.
"We've seized an opportunity to offer what we believe is a startlingly low home loan interest rate. We're looking to grow our mortgage portfolio and to pass through savings to customers," Brock said.
We have sorted the rates table on six month terms here. It shows Brock is correct. The rate is "startlingly low".
Kiwibank can make such a move as the banks are considered to have pretty fat margins on their lending rates at the moment.
We are told Kiwibank isn't using this offer as a loss leader, however it will be on tighter margins.
It also thinks that many borrowers will move from floating rates at the big banks to this six month rate and park their loan with Kiwibank.
This is all part of its strategy to grow its market share but also to get customers to shift from other banks.
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1)What will Kiwbank charge me to refix my mortgage next time round when my fixed rate with them expires? ANSWER = $100
2)What would my current bank charge me by comparison to refix my mortgage with them instead? ANSWER = Nothing
3)If I’m on a fixed rate with Kiwibank and I want to “lock in” a new fixed rate 60 days prior to my old rate expiring (and you’ll be thinking about doing this at some point in the future inevitably as interest rates start moving upwards) what would Kiwibank charge me? ANSWER = $250 + $100 for the actual refix on the day so $350 in total.
4)What will my current bank charge me to do likewise if I’m on a fixed rate with them instead? ANSWER = Nothing
5)If I want to “lock in” a new fixed rate at Kiwibank 60 prior to my old fixed rate expiring but also split my existing mortgage i.e. fix $250,000 for 2 years and $250,000 for 3 years what will Kiwibank charge me to do this? ANSWER $350 per loan portion i.e. $700 in total.
6)What would my current bank charge me if I wanted to split my mortgage similarly above with them? ANSWER = Nothing
So, now that we have some transparency on how Kiwibank can offer this rate to borrowers people can make an "informed" choice as to whom they have their home loan with.