Westpac have now announced their floating mortgage rate reductions and theirs is the smallest reduction of any bank so far.
Their key Choices floating mortgage rate has only been cut by -19 bps, in response the the RBNZ OCR cut of -25 bps.
This small reduction aligns it with the Kiwibank rate, and matches it with their new lower Choices Everyday rate, which they did cut by the full -25 bps.
The effect is to remove Westpac's floating rate advantage which they have held since December 2013.
This change comes just weeks after it pushed down its term deposit offers to the lowest in the market at the time and cements its reputation for stingy rate moves for its customers.
Most banks have moved rapidly to cut their floating home loan rates in response to the RBNZ move, but the changes are not all lock-step.
And there are still a few banks to announce changes.
The one bank who has used the opportunity to offer a more competitive deal is BNZ. They have reduced their key TotalMoney rate by -40 bps to a market leading 6.35%. The TotalMoney product is an offset account. It also comes with a credit card option and the rate on this aspect has also been cut -0.25% to 6.49%, and unusually low rate for a credit card.
Here is an update of the changes since the RBNZ announced its OCR rate cut of -0.25%.
| Product | Previous | change | New rate | effective for | |
| existing clients | |||||
 |
Floating | 6.74 | -0.25 | 6.49 | June 29 |
 |
Variable | 6.75 | -0.25 | 6.50 | June 19 |
 |
TotalMoney | 6.74 | -0.40 | 6.35 | June 28 |
| Std & FlyBuys | 6.74 | -0.25 | 6.49 | June 28 | |
 |
Variable | 6.65 | -0.25 | 6.40 | June 25 |
| Offset | 6.55 | -0.15 | 6.40 | June 25 | |
 |
Choices | 6.59 | -0.19 | 6.40 | June 29 |
| Choices Everyday | 6.75 | -0.25 | 6.40 | June 29 | |
 |
Floating | 6.70 | -0.25 | 6.45 | ? |
 |
Premier Floating | 6.84 | -0.24 | 6.60 | June 15 |
| SBS Bank | Floating | 6.65 | no change yet advised | ||
 |
Variable | 6.74 | -0.25 | 6.49 | June 29 |
Rates for revolving credit borrowing are similar and the details of rates and changes can be found here.
Of course, all rates reported here are carded rates; in negotiation you could well achieve lower offers, even from banks with fixed rates who seem 'uncompetitive'. But your negotiating ability will very much depend on the financial strength you offer to the bank. And for investors, that now means an LVR situation lower than 70%.
We are entering a new phase of rate competitiveness as wholesale rates fall and steepen, and a raft of rate-offer changes are expected over the next few weeks.
However, this situation is coming in a winter where loan demand and real estate transaction levels have been strong. The 'season' is extending this year, deep into winter.
See all banks' carded, or advertised, home loan rates here.
And see the non-rate home loan incentives here.
This is how mortgage rates from the banks compare as at the end of business on Friday, June 12, 2015:
| below 80% LVR | Floating | 1 yr | 2 yrs | 3 yrs | 4 yrs | 5 yrs |
|
6.49% | 5.39% | 5.39% | 5.59% | 5.75% | 5.79% |
|
6.50% | 5.35% | 5.39% | 5.39% | 5.99% | 5.65% |
|
6.34% | 5.35% | 5.39% | 5.49% | 5.65% | 5.75% |
|
6.40% | 5.39% | 5.39% | 5.39% | 5.99% | 5.60% |
|
6.40% | 5.25% | 5.39% | 5.39% | 5.75% | 5.79% |
|
6.45% | 5.29% | 5.39% | 5.49% | 5.69% | 5.69% |
|
6.60% | 4.95% | 4.95% | 5.40% | 5.50% | 5.60% |
| SBS Bank | 6.65% | 5.59% | 5.35% | 5.35% | 5.35% | |
|
6.49% | 5.55% | 5.29% | 5.40% | 6.40% | 5.85% |
6 Comments
I don't think predicting interest rates works. So my only reason for fixing (with Westpac) is to give certainty which I have recently down for a new project. After a period of no debt. dammit.
About 80% is fixed for 3 years at 5.39%. The rest floating at 6.59% which now becomes 6.40%.
So I think I am ahead on daily cost (which is not the main objective) until the floating comes down 1% to match the fixed. Might take a while yet. And the floating would have to plunge a lot and quickly for the fixed to look expensive.
In the meantime I have certainty for three years. Not long, but enough.
The effect is to remove Westpac's floating rate advantage which they have held since December 2013. So tell me interest.co.nz how does this cements its reputation for stingy rate moves for its customers.
They appear to remain very competitive even after this move so I am very happy to have had the floating rate advantage with them all that time and just refixed some of my home loan at 5.25%pa for one year .
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