How Banks Responded to the Rate Cut

ANZ

ANZ has reduced its floating home loan rate to 6.89% for new loans and for existing borrowers. Fixed rates have also dropped, with reductions ranging from 10 basis points for a six-month fixed term to 45 basis points for a two-year term. The new special rates include:

• One-year special: 5.29%
• Two-year fixed: 4.99%

Grant Knuckey, managing director for personal banking at ANZ, highlighted that most customers with fixed rates above 6% will benefit from lower rates when they refix later this year.

Westpac

Westpac has adjusted its rates as follows:

• One-year fixed: 5.49% (-5 basis points)
• Four-year fixed: 5.99% (-10 basis points)
• Five-year fixed: 5.99% (-20 basis points)

However, the bank has discontinued its three-year special rate of 4.99%. Westpac's General Manager of Product, Sarah Hearn, noted that the rate cuts would financially relieve homeowners.

Kiwibank

Kiwibank is passing the complete OCR reduction to its floating home loan rates, now 6.75%. The new rates are in effect.

ASB

ASB is also passing on the complete reduction, bringing its floating home loan rate to 6.89%. ASB has cut its variable rates by nearly 2% over the past six months. Additionally, some savings rates will also be reduced.

BNZ

BNZ has adjusted its floating rates as follows:

• Standard variable home loan rate: 6.94%
• TotalMoney, Mortgage One, and Rapid Repay rates: 7.04%

Mixed Views From Economists

Gareth Kiernan, Infometrics' chief forecaster, cautioned that the Reserve Bank may be ignoring signs of economic recovery and inflation risks by cutting rates too aggressively. He predicted further downward pressure on fixed mortgage rates, with another 25 basis points reduction possible soon.

On the other hand, Kiwibank's Chief Economist, Jarrod Kerr, believes more cuts are necessary. He argues that with unemployment rising and inflation stabilizing, interest rates should drop further to stimulate economic activity.

Kelvin Davidson, Chief Property Economist at CoreLogic, advises borrowers to manage expectations. Although some interest rate reductions are expected, they may not be as large as anticipated.

Banks were already lowering rates ahead of this decision. With global uncertainties persisting, Davidson noted, there may soon be a shift back toward longer-term fixed rates.

What Should Borrowers Do?

The Finance and Mortgage Advisers Association of New Zealand urges borrowers to ensure they benefit from the rate cuts. They advise that if banks do not reduce repayments, customers should contact their lender or consider refinancing with the help of a mortgage adviser.

Country Manager Leigh Hodgetts said that as competition among banks increases, more rate cuts can be expected in 2025.

The time could be right for borrowers to lock in lower mortgage costs and ease financial strain amid the changing economic landscape.

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