Banks immediately drop rates following OCR announcement
Thursday, 28 November 2024
Banks have immediately begun dropping rates on a number of loans following the Official Cash Rate drop.
The Reserve Bank’s Monetary Policy Committee announced the OCR would be lowered by 50 basis points to 4.25% on Wednesday afternoon.
The first bank to announce it was lowering its variable home loan rates was Kiwibank.
The bank slightly jumped the gun and announced it was dropping its rate minutes before the Reserve Bank announcement.
Kiwibank’s term loan - variable and term loan - offset variable rates would drop from 7.75% to 7.25%, while its revolving loan would drop from 7.80% to 7.30%.
Its new Home Loan fixed rates would be effective from December 2 for new lending and December 16 for existing lending.
Kiwibank’s general manager, home lending, Nicole Pervan said the bank was “responding quickly to the Reserve Bank’s changes by lowering our interest rates to help our customers save on mortgages and business lending, making them more affordable”.
“As interest rates decrease, we are seeing signs of increasing confidence and movement in the housing market.”
ASB was next to announce a cut, dropping interest rates across personal, business and rural lending by 0.50%.
ASB’s executive general manager business banking Rebecca James said more than 110,000 New Zealanders held a floating home, business or rural loan with the bank.
“Today’s rate drops will make a meaningful difference to many individuals, households, business owners and farmers across the country. This year we’ve dropped variable rates by 125 basis points, translating to more than $170 million in savings annually back in customers’ pockets.”
ASB’s servicing test rate for home loans was dropping to 7.60%, effective December 2.
The OCR decrease was also being passed on to some of ASB’s savings rates. Savings On Call will move from 2.15% to 1.65% while ASB’s youth account, Headstart will shift from 4.15% to 3.65%.
Next up, just minutes after ASB, was BNZ, which cut its standard variable home loan rate by 0.50%.
This follows the bank’s 50-basis point cut to its standard 6-month fixed home loan rate last week to 5.99%.
BNZ would also make changes to its Total Money, Rapid Repay and Mortgage One rates. BNZ’s Rapid Save rate would decrease by 45 basis points to 3.75% effective from 29 November 2024.
Just over half an hour after the Reserve Bank’s announcement, ANZ announced more cuts to to its floating and fixed home loan rates, floating business lending rates and its savings and term deposit rates.
ANZ’s floating home loan rate would fall to 7.39%, down from 7.89% from December 3 for new loans and December 10 for existing loans. Flexible home loan rates would drop to 7.5% from 8% from December 3.
Its business floating rates a further 40-basis points, resulting in a total 55-basis point cut for the month after the bank earlier trimmed rates by 15-basis points, coming into affect on December 3 for new loans and December 10 for existing loans.
On Tuesday, ANZ announced cuts to its fixed home loan rates of between 10-basis points and 26-basis points.
The changes included a 20-basis point reduction to the 18-month Special rate – taking it to 5.59% - and a 26-basis point cut to the six-month Special rate to 6.24%.
ANZ NZ managing director for Personal Banking, Grant Knuckey, said it had been a tough year for the New Zealand economy and many of the bank’s customers.
“Hopefully, the interest rate changes will provide some relief as we head into the Christmas season.”
Westpac then followed with cuts. Alongside the 0.50% cuts to floating home loan rates, it also cut advertised fixed home loan rates, including a 0.20% drop in the 1-year special rate to 5.79% p.a., and a 0.16% drop in the 2-year special rate to 5.49%.