Homeownerswin in mortgage wars

Competition between the banks for the lowest home loan rate continues – ASB and Kiwibank have hit back with record low rates.

Over the course of the past week, ANZ has offered a one-year fixedterm rate of 2.79 per cent and Westpac and TSB announced on Thursday that they would match it.

Westpac offered the 2.79 per cent rate out to two years fixed. Now ASB is moving to offer a two-year rate of 2.69 per cent and Kiwibank a one-year rate of 2.65 per cent.

It comes amid speculation that the official cash rate (OCR) could be cut below zero in the coming months.

Kiwibank head of borrowing and deposits Chris Greig said the bank was supporting Kiwis to fulfil their home ownership goals, although some might be in a tougher position due to the impact of Covid-19.

‘‘For many customers this has been a challenging time. We have put in place support options, including mortgage repayment deferrals and interest-only payments, and we are continuing to review products and services to make sure we have solutions to meet our customers’ needs,’’ he said.

Craig Sims, ASB executive general manager retail banking, said the reduced rate would be welcome news for many homeowners, and firsthome buyers.

‘‘This new rate is incredibly competitive, and we’re proud to be doing our part to support our customers on their home ownership journey. We hope this will help them manage their home loans, or enable others to be in a position to get into their first home,’’ Sims said.

‘‘This has been an incredibly chal

lenging period for a lot of our customers, and we’re doing everything we can to support them and make things a little bit easier. We’re confident these new rates will help with that.

‘‘We have put in place a number of support options over the last few months, including mortgage repay

ment deferrals and interest-only payments, and we are continuing to review these to make surewe are supporting our customers’ financial wellbeing as best we can.

‘‘It’s been encouraging to see the country start to re-open and New Zealanders be able to return to work, but we’re conscious that the impacts of

Covid-19 will still be felt for a while to come, and we will continue to help our customers through that. Our new special two-year low rate is part of this,’’ says Sims.

The ASB changes take effect from May 23 and Kiwibank’s on May 25.

BNZ has also cut its rates, offering loans out to five years fixed at less than 3 per cent.

Gareth Kiernan, chief forecaster at Infometrics, said the cuts were a reflection of the drop in bank funding costs experienced over the last couple of months.

‘‘Any further cuts from here are probably dependent on the Reserve

Bank further increasing quantitative easing and driving longer-term rates lower, or clearly signalling that the OCR will be cut further once bank systems are able to cope with it – they have until December to get sorted.

‘‘Either of these changes could knock another 50 to 75 basis points off current rates, although the effects would tend to be different across the curve.

‘‘The OCR signal would probably move the shorter fixed rates down by more, while additional quantitative easing might have more of an effect initially on some of the longer-term fixed rates.’’

‘‘This has been an incredibly challenging period for a lot of our customers.’’

Craig Sims ASB executive general manager retail banking