Rate reductions across most terms
BNZ has announced fresh changes to its fixed-term home loan rates following last week’s Reserve Bank cut to the official cash rate (OCR).
While the six-month fixed rate remains at 5.09%, borrowers locking in for longer periods will benefit from modest to significant reductions.
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The one-year and 18-month terms both fell four basis points, now at 4.75% – the joint lowest rate with Westpac.
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The two-year rate dropped 14 basis points, also to 4.75%.
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The three-year rate declined four basis points to 4.95%.
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The four-year term saw the largest fall, down 30 basis points to 5.09%.
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The five-year rate decreased 20 basis points to 5.39%.
Borrowers with less than 20% equity will continue to pay a low equity premium, 1News and Stuff reported.
Reserve Bank signals more cuts possible
The changes follow the Reserve Bank’s 25bp OCR cut last week, which brought the cash rate down to 3%. The widely expected move saw banks move quickly to lower floating and fixed rates.
The central bank also indicated further reductions remain possible.
“If medium-term inflation pressures continue to ease as expected, there is scope to lower the OCR further,” it said.
BNZ also highlighted offset mortgages as another way for borrowers to cut costs, after its customers saved over $200 million in interest through TotalMoney last year. A survey found nearly half of homeowners remain unclear on how offsets work, suggesting many could be missing out.
Competitive mortgage market heats up
BNZ’s latest cuts align it with some of the most competitive offerings in the market, particularly at the one- and two-year terms, where it now matches Westpac at 4.75%.
The moves reflect strong competition among the major banks following the Reserve Bank’s signal that rates may continue trending lower depending on the pace of New Zealand’s economic recovery.
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