Tide turning on high mortgage rates as ANZ brings in cuts

ANZ is the latest bank to cut its home loan rates. Photo / Fiona Goodall

The tide is turning on high interest rates as another bank drops its home loan rates amid falling inflation and a softened tone from the Reserve Bank.

ANZ Bank said from tomorrow it was cutting mortgage rates across all of its standard fixed terms from six months to five years.

This also includes special rates from its six-month term up to three years.

The biggest change includes a drop of 30 basis points to both its special and standard two- and three-year interest rates.

That means the special three-year rate will fall to 6.35% and the two-year rate will decrease to 6.49%.

Among ANZ’s short-term options, its one-year special home loan rate drops 29bps to 6.85%.

Grant Knuckey, ANZ NZ managing director for personal banking, said the bank considered a range of factors when reviewing its interest rates.

This included the Official Cash Rate (OCR), changes in wholesale interest rates and the need to balance the needs of borrowers and savers.

“Following the OCR announcement last week, we’ve seen a drop in wholesale rates so we’re able to pass on savings to our customers,” Knuckey said.

“For borrowers, we know every dollar counts, so hopefully lower interest rates will provide some relief and support for customers.”

Last week the Reserve Bank of New Zealand (RBNZ) kept the OCR on hold at 5.5% for the eighth consecutive time. However, its “dovish” tone had markets picking an earlier cut to interest rates than previously anticipated.

Those picks were given greater validity today after Consumers Price Index data showed inflation was 3.3% in the year to June 30 compared with a 4% increase in the 12 months to the March 2024 quarter.

The headline annual inflation figure also came in below the RBNZ’s expectations of 3.6%.

However, Knuckey cautioned that inflation wasn’t beaten yet.

“The New Zealand economy is still doing it tough and global markets remain volatile due to geopolitical tensions,” he said.

ANZ also lowered a range of its term deposit and PIE fund rates.

These fell 10bps and 30bps respectively for terms six months and longer.

Last week Westpac New Zealand dropped its short-term home loan rates and some of its term deposits.