Banks reduce floating rates after OCR cut

Banks moved fast to reduce floating mortgage rates following the Reserve Bank's announcement today it was cutting the official cash rate to 2.5 percent from 3 percent, in response to last month's devastating earthquake in Christchurch.
Many fixed and floating rates had already been cut last week.
Westpac today said it was reducing floating mortgage rates for retail and business customers by 0.5 of a percentage point. That would see its Everyday floating rate at 5.6 percent and its floating rate at 6.24 percent.
ASB said it was it was reducing its variable lending rate to 5.75 percent, and was also lowering on call savings account interest rates.
ASB chief executive customers, markets and products Catherine McGrath said it was hoped that by dropping the variable lending rate it could help the Reserve Bank alleviate new financial pressures confronting many New Zealanders.
BNZ said it was reducing its variable housing rates by 50 basis points and its six-month fixed rate by 45 basis points. It dropped its standard variable rate to 5.99 percent.
BNZ treasurer Tim Main said that since the global financial crisis, the average cost of bank funding, particularly deposits and term wholesale funding, had been continually rising.
Regulatory changes were requiring all banks to hold more expensive, but more stable forms of funding. BNZ would need to take account of those costs when adjusting lending rates in the future, Mr Main said.
``For now however, rebuilding Christchurch and supporting confidence more broadly in the economy is extremely important, and BNZ has no hesitation in passing on today's rate cut by the Reserve Bank.''
Kiwibank cut its floating interest rates by 0.5 of a percentage point to 5.65 percent.
ANZ dropped its variable term home loans by 0.46 percent to 5.74 percent, while National lowered its rate 0.5 percent, also to 5.74 percent.