BNZ, Kiwibank follow the trend, cutting interest rates

Photo / Richard Robinson

BNZ has published a new set of mortgage rates on its website overnight, including cuts to most of its fixed mortgage rates, but not its floating mortgage rate.

BNZ's cuts to its regular mortgage rates were slightly smaller than cuts on Tuesday and Wednesday by ANZ NZ, Westpac, ASB and TSB, which also left their floating rates unchanged.

Kiwibank, meanwhile, has also announced cuts to its six month to five year fixed-term mortgage rates effective immediately.

Kiwibank cut its six month "limited time special" rate by 36 basis points to 5.59 per cent, one year by 50 basis points to 5.95 per cent, two year by 19 basis points to 6.4 per cent, three year by 19 basis points to 6.9 per cent, four year by 15 basis points to 7.3 per cent and five year rate by 10 basis points to 7.6 per cent.

Unlike the other banks, however, BNZ's regular fixed rates remain above its floating rates. BNZ did, however, introduce a new 'Classic' one year rate at 5.95 per cent, in line with the other banks' regular rates.

Most new borrowers have been choosing floating rather than fixed in recent months because it has been cheaper than most fixed rates.

This leaves open the possibility that BNZ is leaving more of its powder dry for the announcement expected next week from the Reserve Bank of New Zealand, including the possiblity of a cut in the Official Cash Rate in response to the earthquake in Christchurch on February 22.

BNZ cut its regular 1 year rate by 10 bps to 6.35 per cent. It cut its 2 year rate by 15 bps to 6.45 per cent, its three year rate to 6.99 per cent from 7.15 per cent, its four year rate by 5 bps to 7.45 per cent and its five year rate by 5 bps to 7.75 per cent. It left its 6 month rate unchanged at 6.3 per cent and its 7 year rate unchanged at 8.3 per cent.

The other major banks are grouped around 5.95 per cent for 1 year and 6.4 per cent for two years.

However, BNZ did cut its 18 month 'Classic' mortgage rate by 35 bps to 6.20 per cent, which is where it may be targeting its 'fighting' or most competitive rate. ANZ has an 18 month deal of 6.29 per cent, ASB is at 6.20 per cent, TSB is at 6.15 per cent and Westpac is at 6.29 per cent.

- INTEREST.CO.NZ