Kiwibank expects to provide "several hundred" Rarotonga holidays to customers as part of a home loan promotion.
The bank is currently offering a holiday for two in Rarotonga with five nights accommodation thrown in for borrowers, both new and existing, who take out a new home loan of at least $150,000 with a minimum deposit of 20%. Customers will also need to have their wages or salary paid into a Kiwibank account.
To be eligible borrowers will need to get a loan approved between September 14 and November 30 that's drawn down by December 31. Travel must be booked within six weeks of draw down and completed by March 31, 2017.
The holiday offer brings an end to something of a lull in incentives offered by banks to entice customers in the competitive home loan market. Among other banks, the other notable incentive currently in place is that of a Samsung Galaxy S6 phone from TSB Bank. In recent years TVs, tablets, smartphones, grocery vouchers, home makeovers and cash incentives have been dangled in front of borrowers.
However, the overseas holiday offer is the first of its type interest.co.nz is aware of from a New Zealand bank, and a Kiwibank spokesman said it was the first such offer from the state owned bank, which wasn't aware of another bank anywhere making such an offer.
The Kiwibank spokesman said "a few hundred" customers are expected to take up the offer. Asked how the offer worked financially for Kiwibank, he said this was commercially sensitive, but added it had been "very successful" in attracting business.
The holiday features two return flights to Rarotonga, plus five nights accommodation in a beach deluxe suite plus breakfast at the Edgewater Resort and Spa.
However, there are some catches. The offer notes black-out dates running from December 16 this year until January 16 next year, and between July 1 and October 31, 2016. That means the bulk of New Zealand school holidays are excluded from the offer, as is a decent chunk of next winter when the appeal of a tropical holiday is at its height.
Additionally, borrowers will have to organise their own travel insurance, and if their home loan doesn't stay with Kiwibank for at least three years, the bank "may require repayment of up to $2,000."
Another factor to take into account is potential savings a borrower might be giving up by taking out a mortgage from Kiwibank if other banks are offering lower interest rates. For example, ASB currently has the lowest carded three-year rate of 4.49%, 36 basis points below Kiwibank's 4.85%. Based on those rates, a borrower taking Kiwibank's rate over ASB's would be paying an extra $1,620 in interest over three years.
Kiwibank's most recent quarterly figures show the bank grew its home loan book by a net $185 million, or 1.3%, in the September quarter to $14.796 billion. The percentage growth compares to 1.96% quarterly housing loans growth in Reserve Bank sector credit data.
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