The first bank to move after Wednesday's Reserve Bank Official Cash Rate review was the Co-operative Bank who cut their floating rate by an outsized -70 basis points (bps) to 6.95%. For existing customers, that reduction will come on December 13.
They were quickly followed by Kiwibank with a -50 bps cuts to 7.25%. ASB was next, also cutting -50 bps.
BNZ also cut its main floating rates by -50 bps - but only but cut its revolving credit rates by -45 bps. Westpac brought up the rear, but expended its cuts to fixed rates as well. See separate story.
These changes have come fast because the expected cut was delivered and all banks were prepared.
Here is the state of play (which we will update as each change comes in).
| was | cut | Now | effective* | |
| % | bps | % | ||
| ANZ | 7.89 | -50 | 7.39 | 10 December 2024 |
| ASB | 7.89 | -50 | 7.39 | 5 December 2024 |
| BNZ | 7.94 | -50 | 7.44 | 11 December 2024 |
| Kiwibank | 7.75 | -50 | 7.25 | 16 December 2024 |
| Westpac | 7.89 | -50 | 7.39 | 16 December 2024 |
| Cooperative Bank | 7.65 | -70 | 6.95 | 13 December 2024 |
| TSB | 7.89 | -50 | 7.30 | 10 December 2024 |
| * effective for existing borrowers. For new clients, most banks have them effective sooner. |
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Serviceability test rates cut
ASB and Kiwibank also announced cuts to their mortgage test rates. ASB says its servicing test rate for home loans is dropping to 7.60% from 8.10% from Monday December 2. Kiwibank is reducing its mortgage test rate to 7.5% from 8%, also from next Monday.
Banks use mortgage serviceability test rates to gauge the repayment capacity of would-be home loan borrowers’ if interest rates rise. A lower test rate increases borrowers' borrowing capacity. See more on test rates here.
Almost all banks will have some flexibility in their rate offers. So the carded rates are just the start. Negotiate. How flexible they may be will depend on the strength of your financials. And don't forget, banks have savvy tools at hand to 'know' the likely valuation of your property, so if the loan-to-value ratio (LVR) is near 80% you may not find them very accommodating for a lower rate. With falling house prices, the point where low equity premiums start applying is shifting around as well. See this.
As well as cutting floating rates, banks are also cutting at-call savings rates. Kiwibank has cut their by the full -50 bops. Co-operative Bank by -10 bps to -50 bps. ASB also cut its savings rates by the full -50 bps too. ANZ did the same. Westpac also cut its savings rates by -50 bps, but they also trimmed some TD rate by between -10 and -20 bps.
Fixed mortgage rates
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5 Comments
Yay! Houses are ATMs again. Let's all rejoice.
(No. Wait. Why isn't the RBNZ using DTIs and LVRs to restrict credit growth in residential mortgages? Golly. Silly me. NZ's banks can't be trusted lending to businesses as NZ bank's simply don't have a clue about small businesses. Or large ones for that matter. They do have a clue about lazy banking, i.e. residential mortgages.)
Don't be a clown Chris, falls are saving mortgage holders potentially hundreds of dollars a week and that's money better spent in the economy rather than totally wasted in interest repayments. It's time to cut mortgage holders a bit of slack, its getting tough out there.
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