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Mortgage rates hit new lows after OCR cut

Banks have made major cuts to floating and fixed rate mortgages following the Reserve Bank's decision to cut the Official Cash Rate to a record low.

Thursday, May 9th 2019, 7:53AM

Antonia Watson

New Zealand borrowers are poised to enter an unprecedented period of low rates with the central bank rate at just 1.5%. 

ANZ, Westpac, and Kiwibank made the first moves following the central bank's historic decision. Borrowers will able to secure fixed rates of under 3.90%.

ANZ reacted to the Reserve Bank decision by cutting floating and flexible home loans by 0.10% and reducing fixed term rates 0.06% to  0.14%. Fixed rate changes come into effect on May 13, and floating/flexible changes take effect on May 27. Its one year fixed rate is now 3.89%

ANZ's Antonia Watson said: “The current extreme low interest rate environment not only represents an opportunity for new home buyers to enter the market, but for existing home loan customers to pay off as much of their debt as possible.”

Westpac, meanwhile, has cut its one year fixed special rate to 3.89% from 4.05%. Its two year special falls to 3.95% down from 4.05%. 

Kiwibank has also taken the axe to mortgage rates across the board. Its floating home loan rate has fallen to by 15 basis points. Their changes come into effect for new customers on May 13.

On Thursday morning, ASB also announced a raft of rate changes. Its variable home loan rate has been cut by 10 basis points, from 5.8% to 5.7%. Its orbit home loan rate has been cut by 5 basis points to 5.75%. The changes come into effect on May 22. Craig Sims, ABS's executive general manager, retail, said: "We have carefully considered the RBNZ’s decision to lower the OCR along with balancing the needs and expectations of all our customers."

Later on Thursday, Co-operative Bank joined the price war. It unveiled huge cuts across its floating and fixed rate products. For owner-occupiers with a 20% deposit, lenders can borrow at two year fixed rates of 3.99%, three year fixed rates at 4.15%, and four year fixed rates of 4.39%. The bank's five year rate is now available for 4.49%. Its floating rate has dropped from 5.75% to 5.65%.

CoreLogic analyst Kelvin Davidson said borrowers are "sitting pretty" at the moment, and predicts fierce competition from the major lenders. He said: "Competition amongst the banks is already strong, ‘rate wars’ are frequent, and a lower-for-longer official cash rate also bodes well for mortgage rates over the next 1-2 years at least."

Davidson predicted a boost in property valuation, with people able to borrow more. "Property sales volumes and prices should hold up relatively well (albeit not booming), especially since the prospect of capital gains tax has now been taken off the table," Davidson added.

Rates could fall even further later this year. Here's how leading economists predict the rest of the year will play out.

 

Tags: ANZ Kiwibank Westpac

« Advisers react to new CodeBNZ, ASB latest to cut rates »

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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 ▼3.05 3.19 ▼3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - ▼2.55 2.69 ▼2.75
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 3.10 3.19 3.12

Last updated: 7 August 2020 5:51pm

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