‘Relief heading into Christmas’: How banks reacted to the OCR cut

New Zealand's banks have lowered their home loan interest rates after the Reserve Bank cut the Official Cash Rate by 50 basis points earlier today.

New Zealand’s major banks have moved swiftly in lowering mortgage rates after the Reserve Bank cut the Official Cash Rate (OCR) to 4.25% today.

The 50-basis-point (bps) cut – the second in as many months – will provide further relief to homeowners.

The majority of movement from the banks today came in the form of floating rates.

After cutting most of its fixed-term lending rates last night, ANZ followed up with changes to its floating home loans.

ANZ’s floating home loan rate will fall to 7.39%, down from 7.89%. Its flexible home loan rates will drop to 7.5% from 8%.

“It’s been a tough year for the New Zealand economy and for many of our customers. Hopefully, the interest rate changes will provide some relief as we head into the Christmas season,” said Grant Knuckey, ANZ NZ managing director for personal banking.

ASB cut its variable home loan rate by 50bps to 7.39% and its orbit rate to 7.49%. It also dropped its business and rural lending rates.

Rebecca James, ASB’s executive general manager business banking, said more than 110,000 New Zealanders hold a floating home, business or rural loan with ASB.

James said the bank’s service test rate for home loans would now drop to 7.6% from Monday.

Westpac made cuts to both its fixed and floating interest rates.

Westpac’s one-year fixed-term home loan rate will drop 20bps to 5.79% (special) and 6.39% (standard).

It also cut both special and standard six-month fixed rates by 26bps. The special six-month rate now drops to 6.19%, while the standard will be 6.79%.

Kiwibank cut its variable home loan and business lending rates, shaving 50bps off its variable and offset loan rates to 7.25%. Its revolving loan rate will drop to 7.30%.

BNZ cut its standard variable home loan rate, passing on the full OCR cut of 50bps. This follows BNZ’s 50bps cut to its standard six-month fixed home loan rate last week to 5.99%.

But the biggest move came from the smaller Co-operative Bank, which cut 70bps off its floating home loan rate, taking it to 6.95%.

The bank said this was the lowest rate in the market.

Co-operative Bank chief executive Mark Wilkshire said an increasing number of customers had opted for floating rates in recent months in expectation that rates will keep falling.

Many of the banks also cut some of their savings rates.

BNZ made changes to its Total Money, Rapid Repay and Mortgage One rates. The bank’s Rapid Save rate will decrease by 45bps to 3.75%.

ASB cut its on-call rate from 2.15% to 1.65% while its youth account, Headstart will shift from 4.15% to 3.65%.

Westpac said it was supporting savers by not passing on the full Official Cash Rate reduction to its Notice Saver customers. Instead, it would drop 25bps to 3.75%.