RBNZ's 50bp cut triggers mortgage repricing; Westpac leads

New Zealand’s mortgage market is seeing a wave of repricing following the Reserve Bank’s surprise 50-basis-point cut to the official cash rate (OCR), as major and non-bank lenders move to pass on savings to borrowers.

RBNZ’s Oct. 8 decision – which lowered the OCR to 2.5% and signalled it was “open to further reductions” – has already triggered multiple rate moves from ANZ, Westpac, ASB, BNZ, Kiwibank, and Pepper Money. The central bank said it expects the easing to help stimulate growth as inflation moderates within its target band.

Major banks respond to RBNZ’s bold move

ANZ and Westpac were among the first to move following the cut. ANZ dropped its floating home loan rate by 0.4 percentage points to 5.89% per annum, effective from Tuesday, and its flexible home loan rate to 6% per annum from Friday, 1News reported.

Westpac reduced its variable “Choices Floating” and “Choices Offset” rates by 0.3 percentage points to 6.09% per annum, effective next week, and cut its two-year special fixed home loan rate from 4.65% to 4.49%, now the lowest among the five biggest banks.

Fixed-term mortgage rates have already been easing in recent weeks in anticipation of further OCR reductions. Kiwibank joined other lenders in cutting its one-year special fixed rate to 4.49%, while BNZ trimmed its six-month, two-year, and three-year terms by up to 26 basis points — the latter now at 4.49%.

Following those early moves, ASB also reduced selected floating rates, broadening relief across major lenders.

BNZ and Kiwibank extend rate relief

BNZ has since lowered its standard variable rate from 6.29% to 5.99%, alongside cuts to its TotalMoney, Mortgage One, and Rapid Repay variable products from 6.39% to 6.09%, effective Oct. 16.

The bank said there would be no further fixed-rate changes, having already adjusted rates ahead of the OCR announcement.

Kiwibank followed with reductions to its variable term loan and offset variable term loan, now at 5.80%, and its revolving home loan, now at 5.85%. These apply from Oct. 13 for new lending and Oct. 28 for existing customers.

It also lowered its 90-day and 32-day notice saver deposit rates to 2.35% and 1.80%, respectively, 1News reported.

Non-bank lenders join in

Pepper Money has joined the major banks in passing on part of the OCR reduction, announcing a 0.30% cut to floating home loan rates, effective Oct. 16, 2025.

The non-bank lender said the move would apply to existing floating-rate customers, with letters confirming new rates and repayments to be sent soon.

Lower rates to ease pressure on borrowers

Speaking on Breakfast, Finance Minister Nicola Willis (pictured) said RBNZ’s move will start to benefit households and businesses within weeks.

“Kiwis on a floating cash rate for their debt will face lower repayments, which will mean more money available to spend on the things they wish to spend it on, to save it if that's what they prefer,” Willis said.

“So, for some businesses, it'll mean their debt costs less in the future. For mortgage holders, it means that they'll switch on to lower interest rates and have more choices about their spending. So, they'll feel that.”

Willis said both Treasury and the major banks expect growth to pick up in the coming months as lower borrowing costs flow through to the real economy.

Turning point for borrowers and brokers

Willis noted that while interest rates began falling in August last year, the impact takes time to show up in household budgets.

“This is the Reserve Bank doing its job… When inflation gets out of control, it has no choice but to hike up interest rates, and then its job is to bring them down,” she said.

“Now that inflation is under control, the Reserve Bank can bring interest rates down which will flow through into the real economy.”

She said the easing will help drive a broader recovery: “You see people spending more, businesses investing more, jobs being created and incomes growing. So that’s what we expect to see.”

What it means for mortgage advisers

For mortgage advisers, the rapid series of variable and fixed-rate cuts – now spanning both major and non-bank lenders – marks a pivotal opportunity to reprice, refinance, and consolidate client loans.

Borrowers on floating or revolving facilities will be the first to benefit, while those nearing the end of fixed terms should be encouraged to review options ahead of further rate moves.

With RBNZ hinting at potential additional OCR reductions, brokers can help clients lock in savings, assess debt consolidation strategies, and explore alternative lenders like Pepper Money to stay ahead in a shifting market.

Stay informed with the latest housing market trends and mortgage insights – subscribe to our free daily newsletter.