Banks have been quick to react to the latest cut to the Official Cash Rate by the Reserve Bank, with some immediate falls in floating mortgage rates announced.
And BNZ has set a new low for the current rates cycle with a floating rate just under 6%. The bank has dropped the interest rate on its floating home loan product TotalMoney, at a greater rate than the decrease to the OCR – from 6.34% to 5.99%
BNZ Director of Retail and Marketing Craig Herbison said with rates constantly moving, it may be time for mortgage holders to consider floating.
“People might be surprised to learn that with BNZ, a floating rate can end up lower than fixed, thanks to TotalMoney, which takes into consideration a customer’s savings with BNZ.
“For example, if a customer has a $200,000 mortgage and $50,000 in savings, we only calculate interest on $150,000. This means the effective interest rate is 4.49% per annum versus the carded rate of 5.99%. In this scenario, a 30-year loan could be shortened by 10 years, potentially saving the customer $50,000 over the life of the loan,” he said.
“In this example, the TotalMoney effective floating rate is actually lower than today’s Classic fixed two-year rate of 4.99%. I think it’s the market’s best-kept secret."
The new rate is effective Monday 27 July 2015 for new customers, and 11 August 2015 for existing customers.
ANZ today announced it will lower the interest rates on its Floating and Flexible home loans by 0.25% p.a. – to 6.24% for ANZ Floating Rate Home Loans, and 6.35% for Flexible Home Loans. The new rates will take effect for new ANZ Floating Rate Home Loan customers from Monday 27 July and for all existing Floating Rate and all Flexible Home Loan customers from Monday 10 August.
Kiwibank has made an immediate cut to variable and revolving mortgage interest rates following today’s announcement by the Reserve Bank. The rate cuts match the full reduction of 0.25% bringing the floating rates down from 6.40% to 6.15%. The reduction is immediate for new customers and will take effect in two weeks for existing customers.
SBS Bank said it had dropped "a number of" its following the OCR cut, including dropping its residential floating rate to 6.14% p.a - effective 9am Monday morning. The bank was due to release more details later.
These announcements all followed the RBNZ trimming the OCR to 3% from 3.25% and with RBNZ Governor Graeme Wheeler observing that "some further easing seems likely". Economists believe the RBNZ is likely to unwind all of last year's rate hikes by the end of the year, which would take the OCR back to historic lows of 2.5%.
How much more scope there will be for banks to cut mortgage rates further will remain to be seen.
The new floating and fixed mortgage rates compare as follows:
|below 80% LVR||Floating||1 yr||18mth||2 yrs||3 yrs||5 yrs|
We will update this table during the day.