Heartland offers 2.89pc loan rate

Borrowers will be able to access a home loan rate of 2.89 per cent through a new offering launched on Tuesday by Heartland Bank.

It has developed a digital home-loan platform through which people will apply entirely online.

The rates on offer start at 2.89 per cent for one year, through to 3.39 per cent for three years.

The lowest advertised one-year rate among the big four banks is 3.39 per cent.

There are no set-up fees for the Heartland product. Customers must have a 20 per cent deposit or 20 per cent equity and plan to live in the property.

The property they want finance for needs to be a standalone house in Auckland, Hamilton, Tauranga, Napier, Hastings, Kapiti Coast, Wellington, Nelson, Christchurch, Queenstown or Dunedin.

The amount on offer is limited during the trial phase of the product launch but chief executive Jeff Greenslade said he could not reveal how much money was available to borrowers.

Greenslade said it was part of Heartland’s expansion. ‘‘What we are trying to test is the appeal of the digital platform.’’

The rates created very low margins for Heartland, he said, but if the trial was successful it would put in place wholesale loans that would create a better return.

If it did not continue with the product, the loans offered would still be honoured and they would become liquidity assets for Heartland, he said.

Heartland had not been in the home loan market for some time and during that period the lending environment had changed, he said.

The digital approach would reduce its costs and allow rates to remain low.

Customers were increasingly opting to transact online, and via their phones, across a range of industries, he said. ‘‘We’re testing whether that applies to home loans.’’

Heartland already offers online business loans of up to $50,000.