In what it describes as its first ever home loan "book-a-rate," Kiwibank is offering a five-year fixed-term mortgage rate of 6.95%, which undercuts its standard five-year rate by 65 basis points and the lowest advertised five-year rate from another bank, ASB, by 45 basis points.
In a tweet Kiwibank says: "It's our first ever home loan Book-a-Rate! 6.95% p.a. fixed for 5 years - dive in now, it won't last long!"
At 6.95%, the five-year rate compares with Kiwibank's standard 7.60% five-year rate and ASB's 7.40%. However, it's 130 basis points higher than Kiwibank's 5.65% floating, or variable, home loan rate and therefore constitutes a punt on interest rates rising over the coming months. See all bank home loan rates here.
On its website the state owned bank targets customers from other banks noting: "You don't have to be a Kiwibank customer to Book-A-Rate - all we need is your name, email address, and the amount you want to borrow."
Kiwibank has been running an 'Operation Easy Switch' campaign as it promotes recently introduced changes designed to make it easier for customers to switch between banks.
Former Kiwibank CEO Sam Knowles recently told interest.co.nz the banking industry was currently a "non-growth" one where it was all about taking business off your rivals. In this environment Knowles suggested Kiwibank was doing as good a job as anyone. Kiwibank grew lending in the year to June by NZ$1.08 billion, or 10%. That's 6.5 times the rate of the big four Australian owned banks when their lending figures are combined.
A Kiwibank spokesman told interest.co.nz the bank has made book-a-rate offers on deposits before and was now "dipping its toe in the water" for home loans. In a flat mortgage market where there's little change in advertised fixed rates, Kiwibank tries to do things from time to time to spark interest, the spokesman added. Earlier in the year it offered a "special" six month fixed-term home loan rate and a one-year "special."
The spokesman said Kiwibank had allocated a set amount of money for the book-a-rate offer which it won't publicise. Once this is all used up, the offer will close.
The latest Reserve Bank mortgage approvals data shows 5,269 home loans were approved in the week to September 9 valued at NZ$787 million, That's up 7.2% by volume and 26.9% by value, year-on-year, based on comparison of the most recent 13 weeks of data to the same 13 weeks in the previous year.
Meanwhile, Kiwibank says book-a-rate loans are subject to its normal lending criteria. Customers can reserve a maximum limit of NZ$250,000 so if someone wants to reserve more than this, they must complete a second book-a-rate application for the difference.
"For example if you wanted to apply to fix NZ$600,000 you would need to apply for two NZ$250,000 portions and a NZ$100,000 portion and you would receive an e-mail for all three portions confirming your reservation," says the bank.
Kiwibank is promoting book-a-rate through the internet, Twitter and Facebook.