Kiwibank cut means it now offers the lowest one-year mortgage rate by a bank

Kiwibank cut means it now offers the lowest one-year mortgage rate by a bank

In the first mortgage rate cut of 2011, government owned Kiwibank has dropped its one-year mortgage rate to 6.15% from 6.45% in what it describes as a "limited time offer" likely to run until the end of January.

The cut means Kiwibank now advertises the lowest one year rate from any bank, with HSBC the next lowest with its premier rate at 6.24%. ANZ, National Bank, ASB, BNZ and Westpac all advertise one-year rates of 6.45%. See all bank mortgage rates here.

Kiwibank's move is the second change to mortgage rates by a bank in 2011 following HSBC lifting its one-year premier rate to 6.24% from 5.99% and its six month premier rate to 5.74% from 5.49%. Under the terms of HSBC's premier offering, customers’ must have mortgages worth NZ$500,000 or savings of NZ$100,000 to qualify for a loan.

Kiwibank spokesman Bruce Thompson said the 30 basis point cut to the bank's one-year home loan rate was being promoted as a special meaning it would only be in place for a limited time. Thompson said the New Zealand Post subsidiary was aiming to "kick-start the New Year with a very attractive mortgage rate." The new one-year rate matches Kiwibank’s floating rate and is available to both new buyers and customers wanting to refinance existing loans.

“It has been some time since there has been any significant changes to interest rates, so Kiwibank is testing the market with a cut-rate one year offer," Thompson said. "We anticipate holding the rate until the end of the month."

(Update adds comments from Kiwibank spokesman Bruce Thompson).

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

13 Comments

Comment Filter

Highlight new comments in the last hr(s).

Desperation obvious...one time offer to be followed by lucky dip and free hand cuffs...you'll need them when the rates shoot higher. Stay away folks...this is part of the end game...catch the last suckers.

I have 100k left on my Kiwibank Mortgage, which is currently on floating.

Paying back 1k per week, no scope to increase payment at this stage.

What should I do?

All expert advice greatly recieved - I'm a money plonker.

Depends what you did with it !...

You can cut your outgoings and boost your earnings...apart from that...you are stuffed but likely to get an invite to Kiwibank wine and cheese events.

It's summer...make the sprogs sleep in a tent and rent their rooms out....send the other half to the inlaws for 6 months(with the kids)...Take the car off the road and ride a bike...flog golf balls and sell them( helps to have a trained pooch)....tell you neighbours of your money worries and how you intend to panel beat cars in the yard for a few bob...get some old clobber from the Sallies and a tin with a sign..."govt victim".

Stay floating. If you do lock in on the 1 year rate maybe just do half and keep the rest floating.

only a close shave can get you free of their grasp of your short and curlies. 

i choose, for as long is economically viable, to have all my debt floating, except for 600k still locked in at 6.75% for another 3 years.

i suggest that by staying floating you can have them give you the best rate out there, as you can easily swap banks, or imply it is within your current thought processes to change to a bank with a lower floating rate (their customer retention plans will allow most banks to match competing market rates )

so in short no matter what bank you are with, stay floating and get the best market rate at all times, asking them to match better terms whenever they become available.

If you do lock in and end up i a pickle for whatever of the thousand reasons, there will be break fees ad all that awful shit to contend with

good luck, but remember, you gotta keep rolling the dice to stay in the game... but staying floating is like keeping the wild card/joker tucked up your sleeve..

President of Property

You really are a 'money plonker' if you are expecting expert advice from this lot.

Oh dear...one does try to help...another idea is to get some guff on teaching Mandarin and soon as you are two characters up, start offering lessons for $10 and hour to locals...modify a bedroom to take 10 fools and make sure you stay ahead of the brightest...failing that, pay the brightest 20% of the cake to do the teaching....

why dont you give some advice SK as I assume you are saying you know best. On a loan of $100k I would float as it is not a big loan. Or float the amount you think you will pay off quickly say over two years and fix the balance for the two years then look at your position after two years.

With $100K and repayments at $1K per week, the loan will be fully repaid in just over 2 years. Also, the difference in interest payments between 6.45% and 6.15% on this amount will be less than $300 per year (since 0.3% of $100K is $300, and part of the $100K will be repaid during the year). So the answer is float, shouldn't even consider fixing in this situation; fixing is only for certainty over long periods of time.

I couldn't help noticing that Public Trust is quietly chugging along offering 6.19% fixed rate for 1 year without any fanfare .... Disclaimer of interest (haha): I don't work for the Public Trust, but do have a loan with them.

SK, why do you waste your time on this site, you seem to be a fairly on to it person. Most here [ a few exceptions] are simply theorists or someone with an axe to grind. I'm only indulging myself while my broken hand heals up (hopefully). I am intrigued why you bother?

Cheers all. I am a simple sort from Auckland (Mount Wellington - not like SK who undoubtedly lives in Herne Bay) and appreciate your feedback.

For me the question is simple: the current Kiwibank floating rate I am on is the same that Kiwibank are offering for one year. If I intend to stay floating for the rest of the loan (circa two years) then I should accept the one year rate UNLESS there is a chance of the floating rate falling again.

So that's the question, and assuming no flaw in my logic above, will the floating rate go down again as Banks compete or are we on the upward spiral?

I don't think the floating is going to come down at all. But if you take the 1year rate,during that year all the other rates could go up a lot and then the banks can milk you for longer.