Big five's mortgage rates excessive says Kiwibank

By KEVIN TAYLOR

Kiwibank has accused big banks of hitting home-owners with excessive mortgage rates.

The state-owned bank has cut its one-year fixed rate from 6.75 per cent to 6.45 per cent.

The five big banks - ASB, BNZ, ANZ, Westpac and National - all have one-year fixed rates at 6.75 per cent.

Kiwibank's floating rate remains at 6.95 per cent, while four of the five major banks have their floating rates at 7.85 per cent and the other, National, is at 7.8 per cent.

Kiwibank chief executive Sam Knowles said yesterday that interest rates had fallen and the bank could pass those benefits on to customers.

The year-old bank has also cut its two-year fixed rate from 6.85 to 6.75 per cent, and the three-year rate from 6.9 to 6.85 per cent.

Last August it set a floating rate of 6.95 per cent, and Knowles said he was surprised the major banks had not cut their rates.

The floating rates of the big banks were now more than 2 percentage points above the trend-setting 90-day bill rate.

Knowles said the banks' rates were excessive.

New customers taking a fixed rate were being offered much lower rates, but it was strange that the banks were treating new customers differently from existing ones, he said.

"The only justification they have got is that they know their customers are used to being treated in this way."

A Westpac spokesman said it offered a range of specials that enabled customers to considerably undercut the basic floating rate.

He added that 90 per cent of customers took fixed rates anyway, and the bank's rates were constantly under review.

An ANZ spokesman said most New Zealanders wanted fixed-rate mortgages.

"This is a trend that applies across the industry. All the big banks are very competitive with Kiwibank on these rates."

ANZ had Easy Start, which currently offered 6.35 per cent, fixed for the first year, which was 0.6 percentage points below Kiwibank's one-year rate before it was cut yesterday.

The spokesman said Kiwibank should also be careful when using the standard variable rate as the sole source of comparison for floating home loans. ANZ had two other products that offered competitive rates compared with the standard floating rate.

BNZ and ASB declined to comment.

A National Bank spokeswoman said she was not going to enter into a slanging match with Kiwibank, but she pointed out that National constantly came out well in customer satisfaction surveys.

By the end of December Kiwibank had a mortgage book worth $260 million, which Knowles acknowledged was small but he said it was in line with targets.

Kiwibank releases its result for the second half of 2002 on Friday.