Find out which banks offer the lowest mortgage rates
In a competitive push within the banking sector, BNZ has become the last of Australia’s big four banks to offer a sub-5% mortgage rate, setting a new two-year fixed rate at 4.99%.
The adjustment aligns BNZ with its competitors, following ANZ, which was the first to reduce its rate to 4.99% to coincide with the Reserve Bank’s recent cut that slashed 50 basis points from the OCR to 3.75%.
Shortly thereafter, ASB and Westpac announced similar rate cuts on the same day, establishing a new benchmark across the sector.
Comprehensive rate cuts across terms
Effective yesterday, BNZ implemented reductions across several mortgage terms, enhancing affordability for new and existing homeowners, Stuff reported.
The bank has lowered its three-year fixed rate and one-year rate both to 5.29%, and made smaller cuts to its six- and 18-month rates to 5.79% and 5.19%, respectively.
Potential for ongoing savings
Homeowners who secured mortgages at the peak rate of 7.3% last year now have the opportunity to refinance at significantly lower rates, potentially reducing monthly payments on a $500,000 loan from $791 to $619, RNZ reported.
While further rate reductions are anticipated, experts suggest that future cuts may be smaller than those already witnessed.
Market competition heats up
The mortgage rate cuts are part of a broader trend as banks vie for market share in a landscape where new loan growth is limited.
In the competitive banking sector, recent mortgage rate cuts have reshaped which banks offer the lowest rates:
- Short-term rates: BNZ and Kiwibank now offer the lowest six-month fixed term rates, while Kiwibank also holds the lowest one-year fixed term rate.
- Medium-term rates: For 18 months, most major banks are at 5.19%, but ICBC undercuts them with a 4.99% rate. Nearly all major banks have standardised their two-year rates at 4.99%, except Kiwibank.
- Longer-term rates: ANZ and BNZ offer the lowest three-year rates. For four and five-year terms, Westpac provides the lowest rates, catering to borrowers seeking long-term payment stability.
These rate reductions are supported by decreases in term deposit rates, allowing banks to offer lower mortgage rates without major shifts in wholesale rates. Currently, the common one-year rate is between 5.19% and 5.29%, echoing the levels last seen in September 2022, interest.co.nz reported.
