Heritage cuts rates again
Bank ‘balancing the interests’ of all its customers with interest rate reduction
HERITAGE Bank has announced it will continue balancing the interests of all its customers by cutting variable home loan interest rates by 0.15%, while also reducing rates on variable personal loans and credit cards by 0.25%.
The lowest rate now available on a variable home loan with Heritage will be 3.07%.
Acting CEO Paul Williams said Heritage needed to consider the impacts of both depositors and borrowers in passing on interest rate cuts.
“A reduction in interest rates is good news for borrowers, but not so good for depositors, especially when rates are already at their lowest point in history,” Mr Williams said.
“We know there are people who depend on the interest they earn from deposits to fund their living costs.
“Two-thirds of our customers are depositors, and only one-third are borrowers, so we have to consider what’s best for everyone.
“The reality is also that we don’t have the big profit margins of the majors, because we always look to provide great value to our customers, so we have less room to move.
“We’ve passed on as much of the RBA rate cut as we can afford, while balancing the needs of our customers as a whole.”
Mr Williams said reducing interest rates by 0.25% on variable rate personal loans and credit cards would also assist customers who often missed out when home loan interest rates were cut.
“Most other financial institutions simply ignore personal loan and credit card customers when it comes to rate cuts. We’re ensuring they receive a share of the benefits from the RBA decision,” he said.
The rate cuts will come into effect from October 15, 2019.
Late last month, talking up Heritage Bank’s 2018/19 financial results, bank chairman Kerry Betros said interest rates remained a key concern for the bank. “The pressure is the low interest rates,” he said.
“It’s a delicate balancing act to give our borrowers the cheapest rate we can. As opposed to that, we have more people with deposits with us who need the income from their deposits.
“It’s a very difficult environment with a lot of competition out there.”