Rate cut triggers fall in some retail rates

Interest rates on agribusiness overdrafts have been cut today following the OCR reduction to 3pc

The Reserve Bank's decision to cut the official cash rate (OCR) from 3.5 per cent to 3 per cent has triggered a rapid response from retail bankers.

BNZ announced it was passing on the full rate cut for agribusiness overdrafts and business overdraft and variable rates.

"Matching today's OCR cut signals our continued support for our client base through what are clearly challenging times," said Craig Haycock, general manager of BNZ Partners in a statement.

Retail banks have been copping flak from some industry lobbyists, particularly Federated Farmers, for allegedly being slower to pass on rate cuts to farmers and other businesses, than to households with mortgages.

Haycock said the bank was also signalling that it had a strong appetite for quality "new-to-bank" business.

Its rapid repay farming rate was cut from 8.45 per cent to 7.95 per cent, an agribusiness farm first overdraft rate from 10.45 per cent to 9.95 per cent, and a farm first variable rate from 10.20 per cent to 9.70 per cent. A rate for agribusiness old overdrafts dropped from 11.95 per cent to 11.45 per cent, and a revolving credit rate from 11.35 per cent to 10.85 per cent.

Similarly, business overdrafts fell from 10.95 per cent to 10.45 per cent, rapid repay business loans from 9.75 per cent to 9.25 per cent, corporate prime loans from 10.35 per cent to 9.85 per cent, and personal overdrafts from 13.60 per cent to 13.10 per cent.

Westpac New Zealand said the 50 basis point drop in the OCR was what it had expected and that customers would benefit with a 0.4 per cent cut to Westpac's floating mortgage rate (to 6.49 per cent) becoming effective for its customers on March 19 - a change which was actually announced a month earlier.

At the same time Westpac reduced its six-month fixed rate to 5.79 per cent from 5.99 per cent.

Westpac said it was still reviewing other rates, but said significant cuts to fixed term mortgage rates were unlikely because the expectation of today's cuts had already been included in its calculations.
- NZPA