Home loan and business loan rates cut by 25bp
Westpac NZ is passing on the full official cash rate reduction announced today by lowering interest rates for floating home loans, business lending, and savings accounts.
It comes after the Reserve Bank of New Zealand (RBNZ) made the surprising decision to lower the official cash rate by 25 basis points to 5.25% at its August meeting.
What home loan rates are being cut?
The major bank is decreasing its Choices Floating, Choices Everyday, and Choices Offset home loan rates, as well as Business Lending Variable rates, by 0.25% p.a. Additionally, it is reducing a range of variable deposit rates by the same amount.
These reductions come on top of recent cuts to advertised fixed home loan rates since the beginning of July, prompted by declining wholesale rates.
Wholesale rates dropped 19 basis points in anticipation for today’s decision.
The reductions include 0.25% p.a. for 6-month rates, 0.29% p.a. for 12-month rates, and 0.56% p.a. for 2-year rates.
Sarah Hearn (pictured above), Westpac NZ's General Manager of Product, Sustainability, and Marketing, notes that the floating rate cuts announced today signal further relief for homeowners, businesses, farmers, and growers.
“Our fixed home loan customers who are due to re-fix after a 6 or 12-month term are already benefiting from lower rates,” said Hearn. “We will continue to seek opportunities to pass on interest rate reductions to ensure we offer our customers good value in a competitive market.
“However, we recognise that many New Zealanders are still facing high living costs, and we urge them to contact their bank promptly if they have concerns about their financial situation.”
Westpac moves on rate cut despite missed forecast
Before the meeting, Westpac had not forecasted a rate cut this time around, instead expecting the RBNZ to move in October and November.
While inflation had dropped to 3.3% and the labour market had softened with unemployment rising to 4.6%, Westpac chief economist Kelly Eckhold said the data was “no smoking gun” for a rate cut.
However, the central bank disagreed, with the committee noting that the weakening in domestic economic activity observed in the July Monetary Policy Review has become more “pronounced and broad-based”.
“Headline inflation has declined, and business inflation expectations have returned to around 2% at medium- and longer-term horizons,” the board said.
Committee members agreed that monetary policy restraint can now begin to ease.
“The pace of loosening will depend on the extent to which price-setting behaviour continues to adapt to lower inflation and inflation expectations remain well anchored to the target mid-point.”
