Banks cut interest rates as OCR falls 25 basis points

Wednesday, 28 May 2025

BNZ moved ahead of the OCR decision to drop their rates.

Banks have moved to drop their interest rates following the Reserve Bank’s decision to lower the Official Cash Rate (OCR) by 25 basis points.

ANZ was offering its app users 4.89% for a one year home loan, 4.85% for 18 months and 4.92% for two years.

The bank said it was cutting its floating home loan rate by 20 basis points, to 6.49%, and its flexible home loan rate to 6.60%. Floating business loan rates are dropping from 5.05% to 4.80%. The rate on its Serious Saver account will fall from 2.55% to 2.3% from May 31.

“Over the last six months, as we come closer to OCR announcements, we see customers that are coming off fixed choosing to stay on floating until after the Reserve Bank’s decision,” said Grant Knuckey, ANZ NZ's managing director for personal banking.

Prime Minister Christopher Luxon outlines the path to Budget 2025, promoting fiscal restraint and debt control, while reassuring Kiwis that economic recovery and interest rate relief are underway.

He noted the impact of recent OCR cuts: “At the start of this financial year 74% of our fixed home loan accounts were on rates of 6% or higher, this now sits at 36%.”

BNZ

BNZ cut its rates ahead of the OCR decision, offering fixed-term home loan rates below 5%. It is now offering 4.95% for one- and two-year terms and 4.89% for 18 months.

Its six-month fixed home loan rate was cut by 14 basis points (bps) to 5.35%.

James Leydon, BNZ General Manager of Home Lending, said the early move allowed the benefits of a reduced rate to be shared immediately with mortgage holders.

The rate reductions apply to all fixed-term durations, giving borrowers more options as interest rate trends shift.

“By cutting our fixed rates across all terms, we’re giving customers more choice and the ability to lock in a competitive rate for a longer period,” Leydon said.

Westpac

Westpac NZ, after the OCR cut, said it was also reducing its home loan rates, offering customers a special rate of 4.95% per annum across terms 1, 2 and 3-years, effective from Thursday.

The bank said its new 4.95% per annum special rate was the lowest 3-year rate offered by any of the five largest banks and was well below the average rate of 5.40% per annum over the past 10 years.

Additionally, the bank was cutting variable home lending rates by 0.15% per annum. Most variable business lending rates were also being reduced, in line with the 0.25% OCR change.

Kiwibank

Kiwibank’s lowest rates are 5.89% for 1 or 2 years if you have less than 20% equity, or 4.99% if you have at least 20% equity.

The 6 month rate is 5.49%, with 20% equity, or 6.39% without.

After the OCR decision, Kiwibank said it was dropping its variable home lending and savings rates by 25 basis points.

ASB

ASB said it was responding to the OCR by reducing interest rates across personal, business and rural lending by up to 0.25%.

ASB’s Housing Variable Rate would drop 20 basis points, from 6.64% to 6.44%, while Orbit Variable would move from 6.74% to 6.54%. ASB’s Business Base Rate would drop 25 basis points from 11.77% to 11.52% while its Rural Base Rate would also drop by 0.25% from 9.01% to 8.76%.