BNZ, Westpac, ANZ, ASB and Kiwibank cut floating mortgage rates to match RBNZ's 75 basis points OCR cut, some savings rates lowered too

BNZ, Westpac, ANZ, ASB and Kiwibank cut floating mortgage rates to match RBNZ's 75 basis points OCR cut, some savings rates lowered too

The emergency RBNZ rate cut is bringing a flurry of retail rate cuts.

This page will be updated as each announcement is made. Check back often.

The first to be announced will be floating mortgage rate cuts.

Westpac has confirmed changes to the following interest rates:

Housing:

  • Choices Floating and Choices Offset Floating interest rate has been reduced by 75bps to 4.59% p.a.
  • Choices Everyday interest rate has been reduced by 75bps to 4.69% p.a.  
  • The variable housing rate changes are effective from Wednesday 18 March 2020 for new customers and from Wednesday 1 April 2020 for existing customers

 Westpac's fixed home loan rates remain under review.

On savings rates Westpac says:

  • Its 32-day Notice Saver interest rate has been reduced by 75bps to 1.25% p.a. 
  • Its Westpac Bonus Saver and Westpac Bonus Saver PIE interest rate has been reduced by 75bps to have a total available rate of 0.65% p.a.
  • These changes are effective from Wednesday 18 March 2020

 Westpac says term (deposit) investment rates remain under review.


The next announcement is from BNZ who also said they will pass on the OCR cut in full for floating rates, taking their 5.30% rate down to 4.55%.

BNZ also said it has expanded its package of support measures to help business customers through the impacts of COVID-19.

Their business support package includes:

  • Reduction in overdraft rates
  • 100% asset finance funding at reduced rates
  • Extensions of Trade Credit, Principal repayment holidays and moving to Interest Only terms on a case by case basis.
  • Online, 24/7 capability to apply for unsecured lending up to $100K

BNZ's changes are effective from March 18 for new lending, and from April 1 for existing lending.


ANZ has also announced a cut. Their floating home loan rate will drop from 5.19% to 4.44% while the Flexi rate will drop from 5.30% to 4.55%. The new rates will take effect from 19 March for new floating rate home loans and 2 April for existing floating rate and flexi home loans.


ASB says its variable home loan rate will be reduced by 75 basis points to 5.20%, and its orbit home loan rate will be reduced by 75 basis points to 4.55%. These changes are effective from Wednesday, March 18 for new customers and Wednesday March 25 for existing customers. Lending criteria and conditions apply.


Kiwibank is cutting its variable, revolving and offset mortgage rates by 75 basis points to 4.40%, 4.45%, and 4.40%, respectively. Correction: The changes take effect Friday, March 20 for new customers, or Friday April 3 for existing customers..

Kiwibank also says it's bolstering resources to support customers financially affected by the global outbreak.

"The relief package features a range of possible support options for both business and personal customers. These may include: Temporary overdraft facility, interest only option for personal and business lending, and three-month repayment holiday. Any business or personal customer concerned about their situation should get in touch with the New Zealand owned bank to discuss their needs," Kiwibank says.


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SBS Bank, TSB, and the Cooperative Bank have also each cut their floating rate by -75 bps.

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51 Comments

20
up

If you create a debt based ponzi scheme based on borrowing to buy each others houses, while ignoring the productive economy, you better pray those chickens don't come home to roost.

Ignoring the productive sector??
The so-called productive sector are the ones who are going to be the ones that are struggling!
Housing is productive as it is responsible for employing more people than any other industry in the country!
People that waffle on about housing being sold to others as not being productive don’t know what they are talking about.
Watch as housing holds up price wise.
Young people talk about wanting to buy their own home, they don’t talk about wanting to buy shares in the productive centre.
The sharemarket will be in the doldrums for a long time although the institutions will continue to buy.

I agree with most of what you are saying. But unfortunately for many job losses are going to be huge. Tourism is dead for the next month or two at a minimum. All the supporting industry to tourism is therefore also on life support.

You can't pay the rent/mortgage without an income. Housing will be impacted.

That's not how you suppose to define productive sector by basing on how many people it employes. When the global supply chain is disrupted (which is happening at the moment), you will know which industries are productive. Good luck with seeing housing holds up price wise.
https://www.newshub.co.nz/home/travel/2020/03/air-new-zealand-to-lower-c...

Do you see what's happening with shares?
Have you seen what's happened to interest rate yields?
No one who bought them last week; last month or last decade though 'this' would happen to them.
Likewise with property.
By and large, no one thinks it can happen to property - it's not shares or bonds, after all.
But it will....

Not true - many of us offloaded 3 weeks ago - we saw the light coming at the end of the tunnel - how many offloaded their house portfolio? Does not matter really - we are all in this together so let us get through it and we can start bickering again like the old days.

If you were a seller 3 weeks ago, good for you! But my point is, anyone who was a buyer didn't expect what's happened ( or why would they have bought?). It's the same with property. Anyone who expected a fall in house prices sold 3 weeks, 3 months or 3 years ago. They will be glad they did. And will be for quite some time to come.

you wait until all those guys ... "making a fortune on air BnB" "only need to rent it out on the weekends at $400 a night to cover the mortgage" realise the bach in Mangawhai needs to go and fast because no-one is booking it .... and so it goes on

Renter economy is not productive
Production is making things as in GNP with p for production

Yes it is.. cleaning companies to clean up the mess from P House.. especially in CHCH..

Property prices are going to collapse. Once unemployment rates spike up, and over-indebted investors (and sadly, owners as well), lose their job or their business goes belly up, a tsunami of mortgagee sales is going to hit the market.
I pray that the fall in housing price is less than 20-30%, but I am afraid it might get bigger than that.
By the way, it was well overdue that the housing bubble finally exploded. The sooner this happens, the better for the real economy in the longer term. Too many financial and human resources are wasted on parasitic house speculation and parasitic ticket-clippers such as real estate agents. The longer we wait, the bigger the mess with this housing bubble. This epidemics will be a catalyst, as no government nor central bank would have ever had the courage to prick this bubble.

The increase in paid advertising from used house salesman/women has ramped up significantly on the likes of Facebook in recent weeks. Perhaps it will bring a restructure to the RE industry, who by some miracle have managed to keep taking 4% plus of people’s equity for the highly technical role of hosting open homes!

Do we export houses?

been more like an extortion racket against renters

TM2 how does housing employ more people than any other in the country? Building houses? People selling an existing house to another is not productive as it creates no value for the economy.

You are right that people don't buy shares in the productive centre, but that's disingenuous, as people must spend money on putting a roof over their heads, but buying stocks and shares is about saving. When the parasitic landlords have finished fleecing them they haven't enough left to save! (Oh I am sorry - are you one of those parasitic landlords? Oops!)

To my mind, variable rates should have been heading down long ago.

Yes, they are now making a margin of over 4%.

The trend towards fixed the last few years, will also mean the rate cut may take a while to flow through for most residential mortgages.

Reminds me of Star Trek "I'm giving it all she's got captain" but ...

Have they even cut fixed mortgage rates?

Why do that? Likelihood is that they will be called upon to implement full mortgage holidays, or perhaps move everyone to interest only for a period.

I assumed most households with debt would have fixed mortgages, therefore this cut would be negligible for them.
Perhaps it may convince businesses to borrow and invest though...

A number of banks cut last week, as the wholesale rates and term depo rates are largely the driver for fixed rates. The OCR drop was already priced into wholesale markets, and retail TD prices are still "too high" (they start with a 2 not an 0.2)

There is no better time to buy...

Not so sure if you need a mortgage. But even if spending cash, prices are heading down so why break a TD at a 2%+ interest rate (or better) if that's where your money is?

This could be more about the health of the banks.

It always was about the health of the banks. Banks themselves are non productive. They are suposed to lend to people who produce things and employ people. Lending to lift house prices has lead to tears for those who want them and probably tears for those who decided to buy more than one.

Banks are not supposed to lend to people who produce things and create jobs. They will lend to those who can repay them back plus the interest, who can provide collateral for non-repayment etc. In a strong economy with lots of good opportunities that may equates to lending to "productive sector", in a weak, mature and saturated economy, the money will go where it can. Banks have contributed to insane asset prices that is true. But they are not the underlying cause.

I think it has all been handled brilliantly,currencies have wobbled but havent collapsed as they all acted in unison.the only run on a bank should be the bank of mum and dad.

Fear v free money
Psychology tops economics
Prices and sales drop coming

Fear v free money - be interesting to see if anyone wants the debt? I'm mean, who'd want to take on more debt right now, regardless of what the interest rate is?

Recessions are about how confident society is that things will be better in the future than they are today - i.e. they think things will be worse. The narrative has to change, not the lending rate.

Well said Sir/Madam. Comment of the day.

People are in all different financial situations and will affect everyone differently!
Some are financial and will do just fine and yes there will be a lot who go broke and struggle.
However if You don’t panic things will be ok!
Currently in Oz at the mo and it appears that scientists have found 2 medicines that look like it will fix this virus so it may only be a temporary blip on the radar

Even if there is a 'fix' for the virus, the herd is spooked, the narrative has changed. People aren't confident about the future. It might take months or years for people to move from pessimism and return to optimism.

Stay home for 14 days when you get back.. no buying for 14 days please.

Hopefully all flights will stop and you can keep him over there. He can buy up 1/2 the GC.

Dear lord.. No..

what is the new narrative? end of free trade? death of globalisation? return to import tariffs and super heavy duties to make local industries viable?

I think people have moved from thinking they are invincible to being vulnerable (from a health perspective). This outlook is transferring to financial decisions as well.

Could someone help me understand this? In times of crisis, government lowers interest rates so banks can continue lending, so customers can continue buying assets. If banks can't or won't lend, asset prices drop. My question is, why would asset prices dropping be bad news for the economy?

Because the value of assets could end up worth less than the value of the debt they were created with. Insolvency basically. So who wants to carry the loss - the bank or the asset owner? When this situation unfolds, and the bank and the owner realise the situation, watch the panic.

Was living in the USA during the GFC and watching property prices tank there - interesting times. Some very stressed/unhappy people.

The idea is to low interest rate so that business can borrow to continue to run their business.
Borrowing money to buy houses is a bit of a side effect. One major factor to consider is that the bank might not be able to raise their fund outside of NZ because of the low interest rate.

NZ has a high proportion of SME's that make up the engine room of the economy. Many of them have business debt that is secured against a house. If the value of the house drops into negative equity banks will make a decision as to whether they are comortable with that or call in the debt. Their shareholders won't care if you are a nice guy or working hard, they'll take your shirt straight off your back if they choose to.

Ostensibly, the drop isnt to allow banks to lend. It's to encourage people to spend... theory being more money in their pockets or more credit for them. It's unclear whether this actually works in a zero interest rate environment (I'm being charitable saying "unclear"). People dont spend more (except on houses which helps no one) , they often pay down debt or get scared. Either way, not sure it helps the broader economy. Does hurt savers though, that's for sure.

Looking to build four apartments at moment.got resource consent and pre approval.thinking of delaying the build now as maybe build prices will go down?any thoughts guys?

I'd be more concerned that there won't be buyers upon completion willing to pay more than your costs.

PIE TD's are still in the mid-2%+, but I wonder what they'll be offering at the end of March? Are they going to be sub-2%?

World is falling apart and hope banks are not expecting to borrow more money specially when earning/jobs are at risk.

May be borrow more for house and ................seriously........debta based ponzi will it help or create a bigger bubble (will help exesting borrower on floating rate but new borrowers BE AWARE)

Only variable rate cuts? You’d think with the indicated intention for the OCR to remain at 0.25% for a year, they’d at least have adjusted the 1 year fixed as well.

Yeah, would be nice if this flowed to fixed rates where I believe the majority of existing mortgages are. Who would take on a mortgage now, aside from re financing.

And the winner is .................. THE BANKING SECTOR !!!!! .

With the OCR at 0,25% and your Mortgage at 4,25% you are being screwed over at a spectacular rate.

Name any Business on the planet , other than a New Zealand Bank that has a Gross profit margin of 1,600 % ?

And thats on its cheapest lending product .............. unsecured lending ( credit cards and personal loans ) is still at around 16 to 20% per annum

We should be outraged at this .

Err hellow? anyone laugh at moi know? Am I the only one keep on saying to reduce by 75 basis point?..here.
No applause necessary.. just after May, as I told Orr's team to reduce further by 25 points to make it to Zeroh.
Glad the OCR team listed to .. moi.