Mortgage war? Banks competing hard to win customers

There's a general trend of declining mortgage interest rates. Photo / NZME

By RNZ

Banks are competing hard to win customers’ money in what appears to be an escalating mortgage war.

ANZ cut interest rates again this week, but notably it has also trimmed its floating mortgage rate by 15 basis points - the first bank to do so in a while.

It followed a general trend of declining mortgage interest rates in recent weeks as wholesale rates eased in anticipation of the Reserve Bank lowering the official cash rate.

Mortgage advisor Mikey Smith from Guardian Smith said banks have targeted borrowers coming up for renewal, and he has seen increasing wiggle room from banks’ during negotiations.

“It’s very noticeable, I feel like I’m updating people everyday, There’s a new rate available for them - I think more so for the people with existing mortgages and I think that’s what has driven it.

“Over the last couple of years, with interest rates being so high relative to the last 10 years - everyone’s price sensitive at the moment and everyone’s looking around for what option can provide them some easing.”

Smith said banks were aware borrowers were shopping around and were willing to negotiate with advisors.

He said banks were also offering better cash-backs as they fought to win over clients.

“There’s definitely some competition out there,” Smith said.

As for new home sales, Smith did not expect a sharp pick-up in activity if rates were to come down suddenly.

“People are looking at things like job security and stuff like that which wasn’t a problem during the pandemic.”

-RNZ