The action follows similar moves from ASB, ANZ, BNZ, and Westpac
Kiwibank has announced a reduction in interest rates for its short-term home loan products, effective yesterday.
This adjustment sees the six-month special rate decreasing from 6.15% to 5.99%, and the one-year special from 5.79% to 5.55%. Additionally, the two-year special rate will be cut from 5.59% to 5.45%.
These new rates are available to borrowers maintaining a minimum of 20% equity, RNZ reported.
Rates for broader customer base
For customers with less than 20% equity, Kiwibank has also made rate adjustments.
The one-year rate for these borrowers will see a reduction from 6.69% to 6.45%, making financing slightly more accessible for those who do not meet the higher equity requirements.
Context behind the Kiwibank rate cuts
Despite the recent rate reductions by Kiwibank, industry experts cautioned against viewing this move as part of a broader “mortgage war” among banks.
Ed McKnight (pictured above), an economist at Opes Partners, explained the rationale behind the cuts.
“It’s costing the banks less to borrow from other people and lend out mortgages. So they are passing these cost savings on,” McKnight told RNZ.
He said that the changes are not indicative of banks sacrificing their profit margins for market share, which would be expected in a true mortgage war.
“If there was a mortgage war you would expect to see falling bank profitability,” McKnight said. “In other words, banks would be accepting a lower margin in order to gain market share. But, they are not doing this.”
According to the latest data from the Reserve Bank, major banks like ASB, ANZ, BNZ, and Westpac have managed to preserve or even slightly increase their net interest margins over the past year, RNZ reported.
