One-year fixed mortgage rate slashed by major bank

BNZ will cut its standard one-year fixed home loan rate by 26 basis points to 4.49%.

BNZ customer products and services executive Karna Luke said the bank was continuing to compete hard for new loan customers by offering attractive rates.

“We’re seeing strong customer demand for our 1-year fixed term as borrowers look for the right balance between securing a competitive rate and maintaining flexibility in an evolving rate environment.”

He said the cut would provide “meaningful savings” for new and existing customers.

“At 4.49%, this is a nearly 40% drop from the February 2024 peak of 7.35% for the 1-year fixed term – providing real relief for households.

“New customers can access the rate immediately, as can existing customers who are about to refix or are on variable rates.”

Those with less than 20% equity in their property will pay a low equity interest rate premium.

The bank has also lowered its Rapid Save interest rate to 2.30%.

It comes as ASB forecast aggressive action from the Reserve Bank to “jumpstart” the economic recovery, predicting successive rate cuts to bring the Official Cash Rate (OCR) to 2.25% by Christmas.

The OCR will next be reviewed on October 8, and again on November 26 – with ASB expecting a 50 basis point cut followed by a further 25.

“The exact timing of OCR moves and the extent of monetary stimulus deployed is conditional on the economic outlook and forthcoming data,” the bank said.

“The RBNZ will be mindful that there is a lot of stimulus yet to fully work its way through via mortgage refixing and strong agriculture incomes. Wholesale interest rates currently have 60bp of OCR cuts by year end. So, some – but not all – of the benefits of a lower OCR are already factored into term lending rates.”

Incoming Reserve Bank Governor Dr Anna Breman will step into her new role from December 1, with her first OCR decision at the helm of the central bank to occur on February 18, 2026.