Kiwibank has announced a one year mortgage rate special of 5.65%, which is below its previous one year rate of 5.80% and is the lowest one year fixed mortgage rate on the market.
The rate, which Kiwibank called a 'Hot August Home Loan Special' is open until the end of August.
Kiwibank Chief Executive Paul Brock said the present international financial turmoil had given the bank a brief “window of opportunity” to launch a fixed rate special.
“The one year rate of 5.65 per cent matches our present floating rate, so it is a great opportunity for people to lock in a low rate while they wait and see what happens in the markets,” Brock said.
As recently as last week economists and markets were expecting the Reserve Bank to hike the Official Cash Rate by 50 basis points to 3% on September 15.
Markets have now discounted that possibility, although most economists have yet to revise their forecasts.
Early last week one year wholesale 'swap' interest rates, which are used by banks as the base for retail fixed mortgage rates, rose as high as 3.38%.
But market turmoil and fears of a global economic downturn have seen those rates fall sharply back to mid-July levels around 2.98%.
ASB last week hiked its fixed mortgage rates after this early August spike in rates, but yesterday reversed those cuts and in some cases took rates lower than before. See Gareth Vaughan's article here.
See interactive chart below.