Critic says existing borrowers subsidise big-bank cashback deals
ANZ has lifted its floating and flexi home loan rates by 0.1%, a move Squirrel chief executive David Cunningham says boosts margins and helps fund an expensive cashback campaign rather than reflecting higher funding costs.
The floating rate has risen from 5.69% to 5.79% (effective 15 January for new customers and 29 January for existing customers), while the flexi rate moves from 5.8% to 5.9% on 29 January. On an estimated $12 billion floating‑rate book, Cunningham calculates the change adds about $12 million a year in extra interest.
ANZ says it is “a small change to our floating and flexi rates to align with market conditions”.
Cunningham argues that, with the OCR and wholesale funding costs unchanged since ANZ’s last move after the 26 November review, the decision effectively comes down to “because we can”.
“In a nutshell, ANZ has quietly lifted its floating home loan rate by 0.10% (but left its retail deposit rates unchanged),” he wrote in a LinkedIn article, calling it “classic oligopoly behaviour: punish existing customers to fund winning new customers.”
Cashback offer in the firing line
Cunningham links the repricing to ANZ’s 1.5% cashback campaign for new home loan customers late last year, which he says triggered a wave of refinancing as borrowers chased “free money”.
“It was an insanely compelling offer – the largest cashback we saw at Squirrel was over $30,000,” he said.
With other majors matching the 1.5% cashback, he describes “a game of customer pass‑the‑parcel” and argues “in short, the sweetheart deals were funded by existing customers.”
Cunningham estimates fixed and floating mortgage rates are now about 0.10-0.20 percentage points higher than they would otherwise be as banks recover those costs.
Since August 2024, the Reserve Bank has slashed the OCR from 5.5% to 2.25% as inflation has fallen back into its 1–3% target band, prompting big cuts to both floating and fixed mortgage rates across the sector. ANZ itself reduced floating rates by 40 basis points in October 2025 following an OCR move and trimmed its one‑year fixed special to around 4.49%.
Cunningham argues that, in contrast, the latest 0.1% hike has come without any change in the OCR or wholesale funding costs, underscoring how banks can still widen margins even in a falling rate cycle.
What borrowers can do
Cunningham says New Zealand’s concentrated banking market limits genuine price competition, encouraging lenders to protect margins once rivals move in step. For borrowers, he suggests the best response is to be proactive.
“As a customer, the best strategy is to play the game,” the Squirrel chief said, urging homeowners to shop around, negotiate with their bank, and consider switching when large cashback offers are available instead of passively accepting higher floating and flexi rates.
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