One bank claims it’s the only one to have passed on the full benefit of OCR cuts

Thursday, 20 November 2025

Prime Minister Christopher Luxon has two points to make about banks posting big profits in their annual reporting.

One New Zealand bank is claiming it’s the only one to have passed on the full benefit of Reserve Bank cuts to the Official Cash Rate, since it started to fall in mid-2024.

That bank says New Zealanders could be paying more than $100 million a year extra because the four biggest banks aren’t cutting floating loan rates by the full amount. The four largest banks were ANZ, Westpac, BNZ and ASB. Government-owned Kiwibank is fifth-largest.

The Co-operative Bank chief executive Mark Wilkshire quoted the $100m figure in a statement that followed comments from Prime Minister Christopher Luxon, who said he expected banks to pass on OCR cuts to customers “incredibly quickly”.

In the statement, Co-operative said it had “demonstrated market leading action” by cutting its floating home loan rate by 3.1% during the time the Reserve Bank reduced the OCR by 3%.

That made it “the only bank in New Zealand to have passed on the full benefit of OCR cuts to floating rate customers,” Co-operative said.

It also said its floating home loan rate of 5.3% was the “lowest variable rate available to all customers”.

Borrowers could be paying $100m a year extra because big banks aren’t reducing floating loan rates by as much as the OCR has been cut, The Co-operative Bank says.

The Reserve Bank started easing the OCR in August 2024, taking the rate from a cyclic peak of 5.5% down to 2.5% in its most recent review, in October.

Last Monday, Luxon was asked by reporters for his thoughts following ANZ’s announcement of a 21% rise in its annual statutory net profit to $2.53 billion.

Luxon said his message to the banks was that he expected them to pass on OCR cuts “incredibly quickly” to customers. The banks could do “a much quicker job, and a better job,” he said.

Co-operative Bank chief executive Mark Wilkshire.

The Co-operative Bank provided a table showing the five major banks had reduced their floating home loan interest rates by between 2.55% and 2.75% in the time the OCR had been cut by 3%.

Asked about the comments from The Co-operative Bank, an ANZ spokesperson said it was necessary to look at rate changes across the whole interest rate cycle.

Between October 2021 and May 2023, the OCR increased by 5.25%. In response, ANZ increased floating home loan rates by only 4.20%, the ANZ spokesperson said.

An ANZ spokesperson said it had increased rates by less that the rise in the OCR, when the OCR was going up. (File pic)

During that time, the Reserve Bank increased the OCR 12 times. Following 7 of those announcements, ANZ did not pass on the full OCR increase to lending rates.

Since August 2024, the Reserve Bank had cut the OCR eight times, from 5.5% to 2.5%. In response, ANZ had reduced home loan floating rates by 2.75%.

“So, in summary, when the OCR was increasing, we increased our floating home loan rates by 105-basis points less than the total OCR hikes.

“Conversely, in the more recent OCR easing cycle, we have cut our floating home loan rate by 25-basis points less than the total of OCR cuts to date,” the ANZ spokseperson said.

Westpac said 87% of its home loans were on fixed terms (file pic)

A Westpac spokesperson said about 87% of the bank’s home loan customers were on a fixed home loan rate, with Westpac offering sub-5% special rates on all fixed terms from 6 months to 5 years, and was one of the only main banks to do so.

While Westpac had cut its variable home loan rates by 2.55% since the OCR started falling, it had cut some business lending rates by 3.05% - more than the OCR has fallen - to support them to grow, the spokesperson said.

“To support our savings customers, we’ve passed on just 1.75% of OCR cuts on our 32-day Notice Saver product.”

The Westpac spokesperson also pointed to calculations by Opes Partners economist Ed McKnight, who found Westpac had most often advertised the cheapest home loan rates among the five largest banks in the past two years, or so.

McKnight provided his updated calculations to Stuff. They showed Westpac had the lowest or equal-lowest advertised rates 61% of the time. BNZ was second best, just shy of 48%.

“Westpac came out on top because it dominated the longer term rates (2-5 years),” McKnight said.

For shorter term rates, Kiwibank came out on top for the 1-year term, while BNZ was best for the 6-month term.