Kiwibank cuts 'offset' mortgage rate

Kiwibank switches home loan promotional focus to its offset mortgage, drops interest rate 25 basis points

Property

Kiwibank switches home loan promotional focus to its offset mortgage, drops interest rate 25 basis points

26th Jul 13, 9:28am by Gareth Vaughan

Kiwibank has switched the focus of what it calls its "headline home loan marketing" to its offset product, cutting the interest rate on this to 5.25% from 5.50%.

The bank says its offset mortgage lets customers to use their savings, and the savings of other family members, to be "offset" against the home loan, reducing the amount of interest they have to pay.

Kiwibank's previous promotional focus has been on limited time special offers on fixed-term mortgage rates.

“The offset product enables customers to significantly reduce the amount of the loan incurring interest charges," Kiwibank CEO Paul Brock said. "We calculate savings over the term of a loan of $30,000 to $40,000 and much shorter repayment periods."

“It also allows parents and other family members to assist the home owner by letting their savings and transaction balances be used to reduce the amount incurring interest charges," Brock added.

The offset mortgage rate cut is effective from Saturday (July 27) for new customers, and from Saturday August 10 for existing customers.

See all advertised bank home loan rates here.

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5 Comments

by President of P… | 26th Jul 13, 10:43am 1374792207

Finally the floating rate has gone down, about a couple of years of greedy profits too late but at last they are have broken the cartels 'fixed' as in rigged floating rates.

Hope everyone with a chance climbs into this and we see some real competition between the banks - go Kiwibank!!!!

Nice to see some balls and honesty come together

President of Property...

by Father Ted | 26th Jul 13, 8:19pm 1374826781

No conspiracy here. They're just getting in early to pour cold water on Westpac's offset mortgage launch on Monday.

by Boatman | 26th Jul 13, 12:52pm 1374799941

Here be a Can of Worms ..... Call me a cynic , but Kiwibank is the first to break the either implied or tacit price fixing agreement between the banks to not drop the floating rate.

This move by Kiwibank is nothing more than a drop in the floaing rate " in disguise" , and will likely incur the ire of the big Aussies

My view is that its another example of price fixing by poweful organisations in which ordinary Kiwis get shafted .

The use of infomation assymetry by these entities , and non disclosure means we are like mushrooms ,always kept in the dark and fed on bullsh...

It happens with everything from interest rate pricing to electricity pricing , to the Petrol price , the retail milk price, and retail Lamb and Chicken prices .

We are bloody clueless as to how these prices are formulated and left wondering why we often end up paying so much more than everyone else in the world.

by Your Landlord | 26th Jul 13, 12:59pm 1374800371

If we are starting to get falling floating rates but rising longer term fixed rates then...

that means the yield curve is starting to get steeper.

Which means the money markets are starting to price in a lot more economic growth over the next 2-3 years.

This is a good sign for the New Zealand economy.

by Boatman | 26th Jul 13, 1:30pm 1374802253

You score full marks for this observation , GDP Growth is likely to go much higher due to Chch rebuild and development of Auckland , maybe some mining, and some oil and gas development .

I recently went to an economic update by Nathan Penny who sees good times ahead

Tongue in cheek .... its all happy days again , and we will all be rich on the back of a booming economy...... unless of course , something goes wrong