ANZ has slashed its one-year fixed home loan rate to under 3 per cent as the major banks fight to bring in new customers amid the Covid-19 pandemic.
Yet the move will be of little help to the thousands of Kiwis who have deferred payments on their mortgages because they can't afford them at the moment.
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The new 2.99 per cent rate from New Zealand's largest bank late yesterday followed Kiwibank's, which was the first major bank to offer the historic low rate last Thursday.
ASB quickly followed Kiwibank by offering customers a two-year fixed rate at 2.99 per cent.
And housing market analyst CoreLogic said there was every chance interest rates would stay low into the future with the Reserve Bank due to give its updated forecast for the economy tomorrow at 2pm.
"The official cash rate is almost certain to be held at 0.25 per cent [tomorrow]," CoreLogic's Kelvin Davidson says.
"But there is speculation about where that might go next, whether it actually turns negative."
Economists were also widely tipping the Reserve Bank to double its quantitative easing package from $30 billion to $60b, Davidson said.
That injection of cash and "asset purchases" would lower the cost of money and help keep interest rates down and make it easier for banks to lend.
Yet against the lower interest rates sits the threat of future job losses and the ability of home loan customers to repay their mortgages.
The world remains in the grip of the Covid-19 pandemic with a staggering 20.5 million jobs being lost in the United States alone in April, the worst plunge since the Great Depression.
In New Zealand, the official unemployment rate rose to 4.2 per cent for the first quarter of the year, from 4 per cent in the December quarter.
Economists had expected worse, although the data collection largely pre-dated the lockdown with the number expected to rise sharply to between 8 and 10 per cent by the end of the year.
CoreLogic - in a recent podcast - said fellow analyst Infometrics was reporting job losses had hit younger Kiwis hardest.
This had led to a 67 per cent year-on-year increase in the number of Kiwis under 24 who were on Jobseeker benefits, compared to a 35 per cent jump for all ages.
Many Kiwis had also taken advantage of bank offers to defer payments on their home and business loans for six months.
Last week, the New Zealand Bankers' Association said 105,035 loans worth a total of $36.9b had been reduced or had payments deferred on them.
Those loans included home loans, personal lending, credit cards and arranged overdrafts.
Kiwibank general manager of product Nicole Pervan last week said the new sub 3 per cent home loan rates were the lowest it had ever offered.
"Customers with a fixed interest rate expiring within the next month are likely to roll on to a new interest rate 1 per cent lower than their current rate.
"On an average-sized loan, this will reduce repayments [by] $50 to $70, which will go a long way at this time. Customers have the flexibility to pay off their loan faster or keep that money in their back pocket for a rainy day."
ASB - which cut its two-year fixed-term rate to 2.99 per cent, down from 3.49 per cent, effective from last week, said the reduced rate would help Kiwis manage their home loans during this challenging period and support some first home buyers into houses