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RBNZ governor wants lower loan rates

Reserve Bank governor Adrian Orr has called on banks to pass on lower interest rates to borrowers, and has a message for lenders: "We are watching."

Wednesday, February 24th 2021, 3:35PM 1 Comment

Orr said banks had not done enough to lower rates despite unprecedented monetary policy support over the past year.

While the central bank has slashed the official cash rate to 0.25% and launched a Funding for Lending Programme to provide cheap financing for banks, most lenders have kept floating rates around pre-Covid levels, while one year fixed rates remain at 2.29% across the big four banks.

Governor Orr, speaking at a press conference this afternoon, said banks could not use rising wholesale interest rates as an excuse to keep loans at current levels.

He ramped up the pressure on lenders to provide lower rates to households and businesses.

Orr said the central bank wanted to see its monetary policy support passed on. He set out a "clear message" for lenders.

"We are watching to see what their lending rates do. We're aware there's more than one source, there's wholesale interest rates, deposit rates, but our Funding for Lending Programme provides that shadow opportunity for banks to have a low cost of funding, and that is to be seen to be passed on."

"Our core interest is the interest rates that households and businesses face, and so we will be looking forward to continuing to pass through those rates," Orr added.

Asked whether he was happy with current loan rates or if the banks were using cheap financing to bolster their margins, Orr said the central bank "wanted to see prices reflect monetary easing".

"We believe there's more work to be done around passing on interest rate benefits," Orr added.

Tags: Adrian Orr interest rates Lending RBNZ Reserve Bank

« RBNZ plots steady course: economists reactHouse prices added to Reserve Bank remit »

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Comments from our readers

On 25 February 2021 at 12:08 pm BRA said:
Just to let you know Governor many pensioners rely on interest to survive
a reasonable way of life Hard earned savings returning virtually nothing

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 ▼2.25 2.59 ▲2.89
ANZ 4.44 2.89 3.25 3.39
ANZ Special - 2.29 2.69 2.79
ASB Bank 4.45 ▼2.25 2.59 ▲2.89
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.29 2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.89 3.19 3.39
BNZ - TotalMoney 4.55 - - -
Lender Flt 1yr 2yr 3yr
CFML Loans 4.95 - - -
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 2.95 3.45 -
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.40 3.50 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - 2.25 - -
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 2.79 2.99 3.29
SBS Bank Special - 2.29 2.49 2.79
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
The Co-operative Bank - Standard 4.40 2.79 3.09 3.29
TSB Bank 5.34 3.09 3.29 3.45
TSB Special 4.54 2.29 2.49 2.65
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 2.29 2.69 2.79
Median 4.55 2.73 2.99 2.89

Last updated: 23 April 2021 8:50am

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