Kiwibank, ASB, and Westpac have announced reductions in their variable home loan rates, reflecting the recent decrease in the official cash rate.
The Reserve Bank of New Zealand (RBNZ) slashes the Official Cash Rate (OCR) by 25 basis points to 3.50%.
Kiwibank stated that its variable term loan rate has decreased to 6.5%, while ASB’s rate now stands at 6.64%.
Westpac’s Choices Floating Rate has been reduced to 6.74%.
Westpac’s General Manager of Product, Sarah Hearn, confirmed the bank has reduced select variable interest rates by 2.1% during the current monetary policy easing phase.
Hearn noted that, despite uncertainties surrounding global trade and geopolitics, there are encouraging indicators for New Zealand’s economic prospects.
“Lower interest rates should give consumers and businesses a confidence boost after several years of higher costs and interest rates,” she said.
“We’re working hard to support the expected economic recovery over the second half of this year, which means offering not just competitive prices but also great products and services.”
Hearn also confirmed that Westpac is reducing its mortgage serviceability rate from 7.25% to 7.00%.
Meanwhile, Kiwibank chief economist Jarrod Kerr suggested that the Official Cash Rate (OCR) might need to drop further than earlier predictions, which would result in lower retail interest rates for home loan borrowers.
“There’s been a 4.99% out there that’s got a lot of air time… rates are just going to be lower than where they are today.”
“They’ve cut 25 today; we think there’s at least another 50 coming with the threat of another 100 coming, and that’s been priced into wholesale markets.”
“I think we will see lower mortgage rates as these cash rates are pegged lower.”
Banks acknowledged that declining rates might be unfavourable for savers.
“We’ve supported them by holding back some of the previous OCR reductions on key savings products in the current cycle,” Hearn said.
“We encourage savers to talk to us if they’re unsure what falling rates might mean for them,” Hearn said.