ANZ, ASB and Westpac react to OCR cut: Floating, flexible loan rates down after Reserve Bank decision

Banks are reacting to the Reserve Bank’s 50-basis-point Official Cash Rate cut today.

Sarah Hearn, a managing director at Westpac NZ, said lower interest rates are flowing through to households’ bottom lines.

“While there’s still economic uncertainty out there,” Hearn said, “falling lending rates should continue to give homeowners and businesses greater confidence about the year ahead.”

From Friday, Westpac’s two-year special fixed home loan drops from 4.65% to 4.49% per annum, while variable home loan rates will be cut by 0.3% a year next week. Most variable business lending rates drop by 0.5% pa.

For savers, the 32-day Notice Saver stays at 3% pa. Other variable savings rates decrease by between 0.15% and 0.5% pa.

ASB has also trimmed interest rates for customers, with executive general manager personal banking Adam Boyd saying there are “encouraging signs”.

It lowered its housing variable home loan to 5.99%, its orbit variable rate was lowered to 6.09% and its back my build rate was lowered to 3.54%. These come into place from Friday for new home loan customers and from Wednesday, October 15, for existing home loan customers.

Some savings products will be reduced by between 35 and 50 basis points.

ANZ was the first bank to move after the Official Cash Rate (OCR) cut, with managing director Grant Knuckey saying it would be welcome news for borrowers.

“Lower interest rates are helping, and more and more customers are seeing the benefit of rate cuts.

“We’ve ... [seen] people choosing to use lower interest rates to get themselves ahead by saving and paying down their loans faster where they can.”

ANZ cut its flexible and floating home loans by 40 basis points (bps). Its floating home loan rate will be 5.89% from next Tuesday, and the flexible rate will be 6% from this Friday.

ANZ’s business flexible facility will be 5.89% from Friday. Business term loan base rates have also been cut by 40bps to sit at 4.15%.

“We’re committed to offering competitive rates and encourage customers to explore their options,” Knuckey said.

ANZ’s managing director for business and agriculture, Lorraine Mapu, said the OCR cut would be welcome news for customers in those sectors, most of whom were on floating rates.

“We continue to see an economy of contrasts. Regional areas, buoyed by strong farmgate returns and commodity prices, are more upbeat. But many urban businesses are still doing it tough,” Mapu said.

“For those on floating rates, this change will help boost cash flow and provide some debt relief.”

The rate-cutting merry-go-round was in full swing before the OCR announcement.

The five major banks lowered rates by as much as 40bps across short- and long-term loans.

ANZ, ASB, Westpac, BNZ and Kiwibank all dropped their one-year rates to 4.49%.

Kiwibank has the best six-month home loan rate so far at 4.85%, for those with a minimum 20% equity, after cutting it by 20bps.

Meanwhile, rivals ANZ and BNZ trimmed their six-month rates by 10bps to 4.89%.

ANZ, ASB, Westpac and BNZ share the lowest two-year rates at 4.65%.

BNZ also cut its 18-month fixed-term rate by 26bps to 4.49%, matching that of ASB and Westpac.

Westpac was the first bank to offer sub-5% special home loan rates on all terms from six months to five years.

The OCR has now fallen 300bps since August last year, when it was 5.25%.

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