Major banks have dropped their home loan rates as the Reserve Bank again decides to cut the official cash rate.
The central bank’s decision, which will be its final for 2024, to drop the OCR by 50 basis points (0.5%) will be passed on to borrowers as home loan rates are expected to drop.
Cuts to the OCR are generally followed by retail banks lowering their mortgage rates and reducing the interest return on savings.
The reductions announced have mostly been for variable lending rates, although the country’s largest bank and Westpac have cut several fixed-term mortgage rates.
ASB, BNZ, Westpac and Kiwibank announced this afternoon they would pass on the 0.5% cut to borrowers with variable-rate loans.
The changes would become effective in early to mid-December for borrowers, depending on the bank and loan type.
Westpac also announced today it would cut its fixed-term rates by up to 26 basis points, while ASB and Kiwibank were also reducing some servicing test rates for mortgage and home loans from December 2.
Cuts ‘will make a difference for NZers’
BNZ customer executive Karna Luke said the reductions would be welcome news for households. “With Christmas approaching and many households managing their budgets carefully, lower interest rates should help make a difference for New Zealanders.”
BNZ made a 50-basis point cut to its six-month fixed home loan rate last week.
There would also be cuts in interest rates on savings at all four banks.
ASB business banking executive general manager Rebecca James said: “We’re aware that an OCR drop will impact our customers who rely on interest from savings accounts.
“We encourage them to call us so we can support them with options to get the best out of their money.”
Meanwhile, in response to the 125 basis-point fall in the OCR since August, Kiwibank home lending general manager Nicole Pervan said: “As interest rates decrease, we are seeing signs of increasing confidence and movement in the housing market.”
Westpac and ANZ cut fixed-term rates
Westpac also cut its fixed home loan rates following the Reserve Bank announcement.
The standard rate for a six-month fixed-term home loan at Westpac would be reduced by 26 basis points to 6.79% per annum. The special rate would be 6.19%.
The standard rate for a one-year fixed-term home loan would be reduced by 20 basis points to 6.39% per annum. The special rate would be 5.79%.
Meanwhile, the country’s largest bank had already cut its fixed-term rates yesterday before the widely-tipped OCR announcement.
The standard rate for a six-month fixed-term home loan at ANZ would be reduced by 26 basis points to 6.84% per annum. The special rate would be 6.24%.
The standard rate for a one-year fixed-term home loan would be reduced by 20 basis points to 6.39% per annum. The special rate would be 5.79%.
Most other fixed-term rates on offer were reduced by 10 basis points. Meanwhile, term deposit rates for periods longer than 90 days would also be cut.
