BNZ cuts home loan interest rates

Thursday, 22 February 2024

Banks, like any business, want to charge as much as they can. This is what that means for your interest rates.

BNZ has lowered a number of its fixed-term home loan rates, despite increasing predictions that official cash rate cuts could be further away than first thought.

Its one-year special rate drops from 7.35% to 7.29%. The two-year rate drops from 6.89% to 6.85%. The three-year rate reduces from 6.79% to 6.65%. Four- and five-year rates are being cut from 6.75% to 6.55%.

Standard rates drop by a similar margin.

Commentators had been predicting official cash rate (OCR) cuts from August this year, but recent economic data has prompted some to push out that forecast – and ANZ even changed its view to expect two further increases.

While wholesale rates fell sharply before Christmas, they have regained much of that drop. The Reserve Bank will review the OCR next week.

Infometrics chief executive Brad Olsen said the market seemed to be “jumping at every shadow” at the moment.

But he said markets had got ahead of themselves over summer, pricing in cuts from the middle of the year. Some of what had happened since was just an adjustment from that, as the Reserve Bank had been at pains to point out that the current level of inflation is still above the target point.

He said there was still a consensus view that interest rates were at or near a peak and that cuts would come within 12 to 18 months but there were questions over the timing.

Banks would also make home loan rate decisions based on other factors, such as competition and the movements of the housing market, he said. January was a slow month for house sales.

While swap rates had increased, he said they were still lower than where they were between October and December.

“BNZ moving a week out from the OCR means they’ve probably got a certain view that even if the rate does move it might not change the bank’s pricing for the minute.”