Kiwibank, BNZ cut floating, raise fixed mortgage rates

Kiwibank has followed BNZ in cutting its variable mortgage rates while raising fixed rates this morning.

Kiwibank is the last of the regular banks to move in this latest round of fixed rate rises. Kiwibank's variable rate is now the lowest variable rate offered by any New Zealand bank in 40 years.

BNZ and Kiwibank are the only two banks to have lowered their variable rates in the latest round of changes, and this may well put pressure on other banks to revise their previous moves.

Pressure has been placed on the banks by the Reserve Bank and politicians recently to lower their variable mortgage rates.

Kiwibank lowered its standard variable rate by 20 basis points (bps) to 5.79 per cent following BNZ's surprise move to lower its TotalMoney variable rate to 5.85 per cent. Meanwhile, Kiwibank raised its two to five year fixed rates by 30 to 55 bps. Six month and one year rates were unchanged.

Kiwibank's new variable rate looks as if it is the lowest variable rate that has been offered by a bank in New Zealand in more than 40 years, going by RBNZ figures.

Kiwibank Acting Chief Executive Paul Brock said recent comments by the Reserve Bank Governor that the Official Cash Rate is likely to stay at its current level or lower for some time gave it confidence to again cut rates.

"The wholesale markets and deposit rates being offered by banks clearly indicate that in the longer term, rates will rise. But for now we see the opportunity to pass through additional savings on variable rates for our customers," Brock said.

"This gives those home owners with fixed term rates coming due for renewal the opportunity to grab our very competitive variable and short term rates while they consider their options," he said.

"We think that financial commentators will agree that a variable rate of 5.79 per cent is startlingly good value."

Brock noted that customers didn't have to "jump a whole lot of hurdles" to be eligible for Kiwibank's new variable rate, saying it wasn't a special deal and was just a regular rate. "We always want to be the best value among the Aussie banks and we've consistently been there," he said.

BNZ followed other banks in raising fixed mortgage rates by between 30 and 46 bps, but in a surprise move cut its variable rate, putting pressure on state-owned Kiwibank.

BNZ's 'TotalMoney' variable rate is now 5.85 per cent, which was briefly below Kiwibank's previous market-leading rate among banks of 5.99 per cent. Any BNZ customer applying for such a loan must set up a 'TotalMoney' account, which can be used to link with other family accounts to offset mortgage interest with savings interest.

BNZ's new standard variable rate is 6.30 per cent, still above standard variable rates offered by Kiwibank and Bank Direct, but down 6.45 per cent previously.

BNZ raised its 18 month and three to seven year fixed mortgage rates.

AMP Home Loans has also raised two to five year fixed rates by 25 to 46 bps. AMP Home loans' rates are set by Kiwibank, with the state-owned bank's rates typically, but not always, following close behind.

CBS Canterbury also announced fixed mortgage rate changes this morning, raising its three and five year rates by 20 and 15 bps, respectively.

Meanwhile, several banks changed their term deposit rates. Raboplus raised its one and two year deposit rates by 10 and 20 basis points (bps), respectively, but lowered its three, four and five year rates by 5, 10 and 25 bps, respectively.

ASB lowered its nine month term deposit rate from its fighting rate of 4.75 per cent down to 4.40 per cent. Earlier in the week ASB raised its five month term deposit rate to 4.60 per cent, with the action in the currently focused around the four to six month deposit market.

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