Major bank BNZ cuts some home loan rates to keep up with competitors 

  • 06/03/2024
Some of the new BNZ rates will apply to customers with at least 20 percent equity on their property.
Some of the new BNZ rates will apply to customers with at least 20 percent equity on their property. Photo credit: Getty Images

BNZ is joining several of its rivals by cutting some of its mortgage rates.  

On Wednesday, BNZ announced there would be new rates on its classic fixed home loans from six months to two years.    

The move follows last week's announcement that the official cash rate (OCR) would be held at 5.5 percent

Some of the new BNZ rates will apply to customers with at least 20 percent equity on their property.  

For the six-month terms, the new rate was 7.29 percent - a drop from 7.39 percent. For one-year terms in the category, mortgage rates were now 7.24 percent - a reduction of 5 basis points from 7.29 percent.   

BNZ's 18-month rate for special loans had dropped to 6.89 percent from 6.99 percent.    

The bank's special two-year rate had dropped to 6.79 percent, which is lower than competitor ASB's 6.85 percent.    

The special category rates apply to residential owner-occupied homes and investors.    

For those not in the special 20 percent equity club, there were also reductions.    

The six-month rates in that group fell to 9.89 percent from 7.99 percent.    

One-year terms also dropped to 7.89 percent.    

The 18-month offer dropped the most, at 10 basis points, to 7.49 percent.    

People with two-year standard loads would now pay 7.39 percent, a drop from 7.45 percent.    

Last week's holding of the OCR at 5.5 percent was in line with what many economists expected.    

The Reserve Bank said the New Zealand economy had evolved broadly and core inflation and most measures of inflation had declined. The central bank said the risks to the inflation outlook were now more balanced.   

However, the bank poured cold water on any hopes there would be a reduction in the OCR any time soon.    

"The [monetary policy] committee remains confident that the current level of the OCR is restricting demand. However, a sustained decline in capacity pressures in the New Zealand economy is required to ensure that headline inflation returns to the 1 to 3 percent target," it said. "The OCR needs to remain at a restrictive level for a sustained period of time to ensure this occurs."   

Bank home loan rate cuts are emerging amid a possible property glut as the supply of houses available reaches new highs and buyers have more choice than in a long time.   

ANZ and ASB cut some of their home lending rates on Monday.    

Meanwhile, some of BNZ's rates for one-year-to-five-year term deposits also fell on Wednesday.   

The one-year rate dropped to 6 per cent and the two-year is down to 5.6 per cent, the five-year rate had the most dramatic drop down 15 basis points to 5.1 per cent, and the 18-month rates remained steady at 5.9 percent per year.