Big rate cut to hurt savers: ANZ
All five major banks have announced cuts
The ANZ has warned that the Reserve Bank’s big rate cut will hurt savers more than it will benefit mortgage holders with deposit rates likely to fall.
The RBNZ slashed the cash rate by 50 basis points to 1 per cent yesterday — a new record low for New Zealand’s cash rate.
All five major banks have announced cuts to home loan and savings rates after the Reserve Bank’s cut.
“Given how low interest rates now are, a drop in deposit rates is likely to have a bigger impact on elderly savers than a drop in lending rates on home owners,” said Ben Kelleher, ANZ’s acting managing director retail and business banking.
ASB was the first bank to move on cutting its home loan and saving rates but it has since been joined by Westpac, BNZ, Kiwibank and ANZ.
ASB’s variable home loan interest rate will fall from 5.7 per cent to 5.2 per cent and its revolving credit Orbit home loan will drop from 5.75 to 5.3 per cent.
Those changes will come in from August 14 for new customers and August 21 for
existing customers. It is more of a shaving for its fixed rate, slicing just four basis points off its two-year fixed term rate, dropping it to 3.75 per cent.
ANZ lowered interest rates on its Floating and Flexible revolving home loans by 0.50 per cent, from 5.69 per cent to 5.19 per cent.
It said it would be reviewing deposit rates.
Craig Sims, executive general manager retail at the ASB, said it was limiting its cut on deposits to its on-call savings accounts, and to five basis points.
“We believe our new lower rates provide a fair and considered outcome for borrowers while also balancing the needs of our savings customers.”
The banks are heavily reliant on deposit holders to help fund their loan books and have been cautious about cutting those rates.
BNZ will cut its floating rate to 5.3 per cent while its twoyear fixed term rate will fall to 3.75 per cent — matching the ASB rate.
Canstar New Zealand general manager Jose George said the extent of the official cash rate cut was a surprise but was good news for borrowers.
“For those who rely on savings, such as retirees, this news will not be welcome.
“However we would expect banks to be reluctant to push savings rates down too far, too fast.”