Westpac follows two rivals with some matching rate cuts, but goes lower with a three year home loan rate. And it offers savers a higher nine month term deposit rate

With borrowers now favouring the short fixed terms of six months and one year, Westpac has found it can't live with the "highest" carded mortgage rates in that space among the major banks, announcing it's falling into line from Monday, May 13.

In addition, it has decided to try some unique pricing for borrowers who are prepared to fix for three or four years.

It has leveled its already competitive 6.39% five year rate across all terms three, four and five years.

At the three year term especially, it will have a -26 basis points (bps) carded advantage.

Interestingly among all the majors, 6.39% is also the lowest rate on offer. (We should note however that SBS Bank currently has a 5.99% carded rate offer, the lowest rate of any bank in the current market.)

Those who go for the one year 7.14% from ANZ or ASB are leaving 75 bps on the table. (From the SBS offer, it is 115 bps on the table.)

So they are assuming that one year rates will fall more than three -25 bps rate cuts over the next 36 months. It is possible but no certainty. Yes, financial markets are currently pricing in three -25 bps OCR cust by the end of 2025, but ... and it is an important 'but' ... that is assuming New Zealand CPI inflation will fall back into policy range to an extent that the Reserve Bank likes and is prepared to act on.

Maybe some borrowers will be attracted the the current certainty of the three year 6.39% offer now over the hoped-for future moves. The saving in the meantime may well work out more than going short and 'hoping'.

The -26 bps fixed three year home loan rate reduction was not the only Westpac change today.

For savers Westpac has raised its nine month term deposit offer by +15 bps taking that rate to 6.15%. At the same it has trimmed its six month rate by -10 bps to 5.90%.

6.15% for nine months is the best rate term deposit rates of any term from a main bank. And Westpac is supporting the local helicopter rescue trust with a donation based on new accounts opened with this rate. That said, it is still lower than the 6.20% for nine months or the 6.30% for 12 months currently on offer by Rabobank, which are the top rates available from any bank at present.

One useful way to make sense of the changed home loan rates is to use our full-function mortgage calculator which is below. Term deposit rates can be assessed using this calculator.

And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options. But break fees should be minimal in a rising market. They will become important in a falling market however.

Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at the moment.

Fixed, below 80% LVR	6 mths	1 yr	18 mth	2 yrs	3 yrs	4 yrs	5 yrs
as at May 13, 2024	%	%	%	%	%	%	%
ANZ	7.25	7.14	6.89	6.79	6.65	7.34	7.34
	7.24	7.14	6.89	6.75	6.65	6.49	6.39
	7.29	7.24	6.89	6.79	6.65	6.55	6.55
	7.35	7.25		6.79	6.65	6.55	6.55
	7.29 -0.10	7.24 -0.05	6.95	6.75	6.39 -0.26	6.39 -0.20	6.39
Bank of China	7.09	6.99	6.75	6.65	6.49	6.39	6.39
China Construction Bank	7.19	7.09	6.89	6.75	6.49	6.40	6.40
Co-operative Bank	7.29	7.14	6.99	6.79	6.65	6.55	6.55
Heartland Bank		6.89	6.69	6.55	6.35
ICBC	7.19	7.05	6.79	6.75	6.59	6.49	6.49
	7.35	7.24	6.99	6.69	5.99	6.19	6.19
	7.39	6.99	7.19	6.75	6.65	6.59	6.59