Antonia Watson says ANZ NZ doesn't try to hold back interest rate cuts from borrowers via slow post-OCR cut rate changes

In the latest installment of Parliament's ongoing banking inquiry, Green Party co-leader Chlöe Swarbrick pushed the chief executive of ANZ New Zealand to spell out the process NZ’s largest bank takes to change its interest rates following movements to the Official Cash Rate (OCR).

Swarbrick, who is also the MP for Auckland Central, asked ANZ’s Antonia Watson this on Monday. 

Swarbrick asked Watson to run the select committee hearing through what ANZ's process, when deciding whether to lower or increase interest rates, looks like.

Watson said ANZ had a pricing committee that meets every two weeks or so and they discuss what ANZ’s pricing should look like.

“If there's an OCR call coming up [then] before that OCR call, we would workshop what we're doing, you know, depending on how it landed, what we would do in that case. And that's why you've seen us come out so quickly after the OCR drops recently with pricing changes across our entire business,” she said.

Watson said ANZ’s pricing committee looks at what ANZ is doing and the bank’s returns and capital.

“But [the committee] primarily looks at the competition and sees how well are we placed to get new business so that we can grow our book,” Watson said.

14 days

Swarbrick then told Watson that the committee had been provided a list by the Banking Reform Coalition that compared the length of time each of the big Australian-backed banks in NZ took to implement rate changes post OCR decisions.

Swarbrick said the list showed it took ANZ 14 days to pass on the Reserve Bank's 50-basis points February OCR reduction. ASB took nine days and BNZ took seven days to implement rate reductions.

“Why did it take you guys 14 days?” she asked.

Watson said she didn’t have the list information and wanted to know what product that the list had used to compare the different banks.

“Because different products have different time frames,” she said.

Swarbrick didn’t have that information on hand but said she was assuming that it was an average – which Watson didn’t think would be the case.

Watson said it was her understanding that ANZ makes changes to its interest rates within four to 10 days post-OCR. 

This depended on the product, if it was for new or existing customers and the time it took to inform customers about rate changes.

Watson added that ANZ had one savings product – Serious Saver – that due to ANZ’s current IT system could only have its interest rate changed on the first of the month.

“When interest rates go up we actually tend to take longer because we want customers to get used to the idea of the interest rate going up. But I'm just not sure on those figures. I'd need to see them and interrogate them and investigate them,” she told the committee.

Watson also said that she thought part of the point Swarbrick was trying to make with her questioning was if ANZ was trying to hold back interest rate cuts from borrowers.

“The answer is absolutely no,” Watson said.

Floating mortgages rise in popularity

Floating mortgage rates are the key borrowing rates to track following a change to the OCR. 

After the Reserve Bank cut the OCR from 4.25% to 3.75% on February 19th, ANZ trimmed its floating home loan rate effective from March 5th. 

This was slower than BNZ which cut its floating home loan rate effective from February 26th, with ASB’s floating home loan rate lowered from February 28th.

However, ANZ was quicker out the gate than Westpac and Kiwibank, with both banks cutting their floating home loan rate effective from March 10th.

According to the latest monthly Reserve Bank figures on floating rate mortgages, floating home rates made up a third of new mortgages for owner-occupiers in January.

The figures show 31.8% of the new mortgage money for owner-occupiers was on floating rates, up from 23.5% in December and was the most popular mortgage option in January.

The second most popular mortgage option in January was six-month fixed rate mortgages, with a 30.0% share, down from 38.1% in December.

The inquiry is being undertaken by members from Parliament’s Finance and Expenditure and Primary Production select committees.

Bosses of the big four banks – ANZ, BNZ, ASB and Westpac – are being called back to the banking inquiry for a second time. Banking reform activists told the committee that banks were creating a $6 billion to $10 billion drag on the annual economy.