The Co-operative Bank CEO Mark Wilkshire puts a spotlight on floating mortgage rates, where his bank is the outlier

The Co-operative Bank's CEO Mark Wilkshire says carded, or advertised, floating mortgage rates offered by most other banks are too high, with his bank's significantly lower rate still providing "a reasonable margin."

The Co-operative Bank has its floating rate at 4.99%. The next lowest carded bank floating rate is Bank of China's 5.10%. The big five mortgage lending banks, plus TSB and SBS Bank's floating rates, range from 5.75% to 5.89%. See all banks' advertised, or carded, mortgage rates here.

"I think it's not so much  that we're doing something different. I think the rest of the market has followed a different approach, which I think is quite interesting," Wilkshire says.

"I think the floating rate for us is a reasonable margin. And I think that the harder margins for us are on the fixed rates."

As of Friday, the average carded bank six-month rate was 4.515%, the average one-year rate was 4.734%, and the average floating rate was 5.66%.

Wilkshire notes the consensus view is the bottom of the interest rate cycle has passed, and it's now a matter of how much rates rise.

"So you look at that environment and say, why would you have something [floating] close to 6% and then have six months in the mid-fours?"

"We think we're being very simple and transparent in our pricing approach ... And I don't think that's what the rest are doing," says Wilkshire.

"And I think they're just not prepared to take the hit on their floating portfolios, which gets transmitted to new and existing customers straight away."

During the Reserve Bank's Official Cash Rate (OCR) cutting cycle that ended last November, Wilkshire says The Co-operative Bank passed on all of these cuts "and a little bit more" to its floating mortgage rate.

"It's clear that they [other banks] didn't, they retained some of those reductions," he says.

The OCR was cut from 5.50% to 2.25% between in August 2024 and November 2025.

The Financial Markets Authority (FMA) now has an OCR bank pass through transparency page on its website, something the FMA pledged to do to when appearing before Parliament's banking inquiry last year.

“I can assure you that the time taken to pass on changes in OCR to banks’ customers will be something that we will be paying very close attention to,” FMA Chief Executive Samantha Barrass told MPs a year ago.

Wilkshire says around one-third of The Co-operative Bank's mortgage customers have some of their loan on a floating rate. He suggests this is similar to industry trends.

"Typically they might have an average home loan of, say $500,000. They might have $100,000 on floating. [To] give them a bit of flexibility. If they've got some variable income or a bonus or they want a bit more flexibility to pay off an extra sum without penalty, then they'll put a piece on floating."

"And I think when things get a bit uncertain but hard to pick, you'll see customers do that."

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