BNZ mimics ANZ with parsimonious mortgage cut

BNZ holds on to almost all the OCR rate reduction, citing 'other considerations' and higher capital requirements, making their customers pay for these pressures

12th Aug 16, 10:56am by David Chaston

BNZ has now revealed its response to the -25 bps OCR cut that the Reserve Bank announced on Thursday.

They are following ANZ's lead and only passing on -5 bps to their customers on a floating rate.

This changes its rate to virtually the same as offered by Westpac, and almost 40 bps higher than the rate offered by Kiwibank.

“At BNZ we strive to get the balance right to meet the needs of our customers,” said Craig Herbison, BNZ’s director of retail and marketing. “There are a range of factors that influence whether bank increases or decreases its interest rates and the OCR is one of those. Other considerations are costs, the volatility of offshore markets and the requirement to hold greater capital. We are pleased to be able to offer an increase in the 18 month term deposits for savers.”

“The majority of our customers are on fixed rates, which are often lower than the rate card for floating, or are offsetting their floating rate with our TotalMoney home loans. Now is the time for people with home loans to take advantage of the lowest rate in a generation and come and talk to us about paying off their mortgage faster.”

BNZ's announcement is salved by a +30 bps rise in their 18 month term deposit offer. (Details here.)

See all banks' carded, or advertised, home loan rates here.

Floating	Prior rate	New rate	Change	effective from
	%	%	%	for existing clients

	5.64	5.59	-0.05	29 August 2016
	5.65	5.55	-0.10	24 August 2016
	5.69	5.64	-0.05	29 August 2016
	5.45	5.25	-0.20	29 August 2016
	5.75	5.65	-0.10	31 August 2016

	5.45
	5.75
ICBC	5.60
	5.69	5.54	-0.15	18 Sept 2016
	5.54

Mortgage rates

Select chart tabs

Source: interest.co.nz

Source:

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18 Comments

by Machiavelli | 12th Aug 16, 11:05am 1470956729

Didn't Graeme say he wanted all of the cut passed on? So the banks just listen to him when it benefits them...

by President of P… | 12th Aug 16, 11:57am 1470959861

I think you'll find it was Jong Kee that said that.

by President of P… | 12th Aug 16, 12:12pm 1470960748

Look at that. It was both of them saying that.
Looks like the banks have no respect or self preservation in mind
Run baby run. Games over. We are just watching the implosion in slow motion
No wonder people want hard assets not imaginary money.

by KH | 12th Aug 16, 12:08pm 1470960497

Another demonstration there is no competition in banking.

by dmitri | 12th Aug 16, 4:28pm 1470976120

They're all (big four) belong to the one same group and to each other..

by Justice | 12th Aug 16, 4:57pm 1470977873

Mortgages are voluntary. I really don't get some of the whinging regarding mortgage rates, they ARE at record lows and have been for quite some time. Banks making a huge profit off us all? surprise surprise! They have been doing that since their creation.

Clearly if interest rates went back to 8% many people would be screwed.....

by bigblue | 12th Aug 16, 4:27pm 1470976070

Filthy bankers! Truly taking the piss.
BNZ - "Now is the time for people with home loans to take advantage of the lowest rate in a generation and come and talk to us about paying off their mortgage faster"
C'mon - Pass on the full OCR cut you greedy monopolistic bankers and then we can pay off mortgages even faster.
Absolutely no excuse for profit taking and widening their margins - cost of offshore funding has dropped - swap rates are under 2% for most terms ie record lows and banks making record billions

by bigblue | 12th Aug 16, 4:44pm 1470977090

No wonder there is no competition between the banks - look at how they all have common ownership here:
http://blog.creditcardcompare.com.au/big-four-ownership.php

by David Chaston | 12th Aug 16, 9:32pm 1470994337

I have pointed this out before - this conclusion is ignorant of how bank trust departments work. Those 'ownership' diagrams are only for consiracy types. The fact is bank trust departments hold these share for other beneficial owners, most probably big [US ?] mutual funds. And one bank may hold in trust these holdings for many such mutual and hedge funds. Charts like this are meaningless (a bit like the naive claim that the RBNZ 'owns' Fletcher Building). Before you spread such rubbish, you a) need to read the article in full, and b) do some simple research about bank trust departments.

by sharetrader | 12th Aug 16, 9:43pm 1470994984

there would be a lot of kiwisaver funds holding bank shares so I guess a small amount of profits are returned

by MisterB | 12th Aug 16, 10:38pm 1470998290

Well said. Some people misunderstand how nominees work and how things like 401k, Kiwisaver etc pool and hold equities.

by Lemon Tree | 12th Aug 16, 11:48pm 1471002487

This is nonsense and ignorance. Look at the owners of every global public company - you will see the same bank trustee or nominee shareholders.
http://www.investopedia.com/terms/s/streetname.asp

by Too clever by half | 12th Aug 16, 5:03pm 1470978230

The cut will be passed on in full if you know how to negotiate, Banks just not showing it to each other. Some mugs always paid carded rates.

by quality guy | 12th Aug 16, 5:08pm 1470978538

The fact that banks are holding on to most of the ocr cuts should sound alarm bells regarding their future profitability and also future fumding of mortgages since we dont save enough to self fund our own mortgage funding requirements. Yup its a slow slide to a depression. Watch out by xmas if the milk prices dont recover, that will see the rockstar economy enter rehab

by imhenry | 13th Aug 16, 8:39am 1471034363

Cannot see the point in an OCR cut if the Banks are going to hold on to most of it. The Banks win on the way up and down.

by bigblue | 12th Aug 16, 5:25pm 1470979521

If they like the cut of your gib and you are moving all your business across to them BNZ will do 3.85% fixed for 3 years! Anyone been offered better than that? What level of lump sum cash payments have you been offered lately?

by MisterB | 12th Aug 16, 10:41pm 1470998513

With retail TD rates at 3.40% for 3yrs, I find this hard to believe. Let's say they offer cash, that's loss making before commission and origination expenses. But, hey, if you can get it. But it's on the internet, so it must be true.

by JT | 12th Aug 16, 5:50pm 1470981027

Is that right, 3.85%!. I shall be talking to my bank manager......