ANZ offers homeowners in Christchurch's earthquake devastated red zones 3.70% one-year mortgage rates; Kiwibank matches

ANZ New Zealand, owner of the ANZ and National banks, says it'll offer a special 3.70% one-year mortgage rate - which is below the bank's cost of funding - to Christchurch residents relocating in the wake of the series of earthquakes in the city.

State-owned Kiwibank also announced a special offer for affected Christchurch residents, offering a 2% discount on its floating rate for a year for those who accept today's offer from the government and are wishing to purchase or build a property elsewhere. 

ANZ said its offer, open until December 31, 2012, was for Christchurch residents in the red zones where the Government has made an offer to purchase their home. The offer is 2.04% below ANZ and the National Bank’s variable, or floating, mortgage rate. After one year, the normal variable rate will apply. Loans will be capped at NZ$500,000.

"Although we have earmarked NZ$1 billion for this package, the situation is unprecedented and we don’t know how large the take-up will be," ANZ CEO David Hisco said.

"Given this, we have capped the size of the loan each customer can receive to ensure everyone who is eligible has the opportunity to take up the offer. The amount available to each customer is however well above the average house price in Christchurch."

The bank estimates its offer could save someone borrowing NZ$300,000 about NZ$6000, and If the whole fund is taken up this would provide a total of about NZ$20 million in savings. An ANZ spokeswoman told interest.co.nz the bank would lose money on the scheme because the interest rate it was offering was below its own cost of funding.‬ ‪ ‬ ‪

The spokeswoman also said that while it was true that in offering this deal ANZ hoped to gain customers who are currently with other banks, there were much more cost effective ways of doing that if that was the main motivation.

"The issue of restraining mortgage defaults was not a consideration at all," she added. "In making this offer ANZ New Zealand genuinely wanted to do something to help people affected by the government's announcement and support them and the wider Christchurch community as they get back on their feet."

People could take out a loan if they were moving elsewhere in Christchurch or New Zealand at the 3.70% rate, but not if they were moving overseas.

“Today’s announcement by the Government provides people in these areas with the clarity they desperately need," Hisco said. "But we also know many of them have had a torrid time for months now, and the challenges are not over for them yet. We want to help them back on their feet again, by providing something extra special for such an extraordinary situation."

Subsequently, Kiwibank has made a similar offer, for those who "wish to purchase or build a property elsewhere".

See all bank mortgage rates here.

Summary of ANZ New Zealand Christchurch Mortgage Package

* Low variable mortgage interest rate (currently 3.70%) pegged for one year at 2.04% below ANZ’s and The National Bank’s variable mortgage rate. After one year, the normal variable rate applies. The package is available directly through the ANZ and National Bank.

* Open to customers of any bank, including ANZ and The National Bank, who own a residential property in the residential red zones where a Government offer has been made for purchase, whether they decide to stay in Christchurch or to relocate.

* Loan capped at $500,000 per customer to ensure as many Christchurch residents who wish to relocate have access to the $1 billion fund. Additional lending available on normal terms.

* Applies to residential mortgage lending and is subject to normal lending criteria.

* Participating customers need to deposit the net proceeds of their Government payout into an ANZ or National Bank account within two months of receipt, and must have their salary direct credited to an ANZ or National Bank account.

* Loans must be drawn down by 31 December 2012.

“Although we have earmarked $1 billion for this package, the situation is unprecedented and we don’t know how large the take-up will be. Given this, we have capped the size of the loan each customer can receive to ensure everyone who is eligible has the opportunity to take up the offer. The amount available to each customer is however well above the average house price in Christchurch.

“We want to help Christchurch rebuild and we expect that many people will stay and be part of the city’s long term revival. We know however that some people may decide to move elsewhere in New Zealand and we want to be there for them as well,” Mr Hisco said.

For more information and to register interest, eligible Christchurch residents should call 0800 269 4663 or obtain more details at www.anz.co.nz/relief.

Here is the Kiwibank offer:

Kiwibank has today announced a special home loan package for people affected by the earthquakes in Christchurch and eligible for the Government’s red zone assistance.

The bank will provide mortgage lending at a 2 per cent discount on its floating rate (presently 5.65%) for a year from draw down.

The loan package is available for those who accept the offer from the Government and wish to purchase or build a property elsewhere. They will be required to contribute the Government’s payout towards the property purchase price.

Lending criteria will apply.

(Updates add comments from ANZ spokeswoman and details of Kiwibank's offer).