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Variable Home Loan Rate Increase

Media statement

5 February 2004

Variable Home Loan Rate Increase, Term Deposit Rates Rise

Bank of New Zealand has announced an increase in the interest rate on its variable rate home loans following similar increases by other major lenders. Bank of New Zealand’s variable rate will rise by 0.25%, to 7.50%, from Monday, 9 February.

The increase reflects the increase in the cost of borrowing for the bank. Ninety-day bill rates have risen more than 20 points since late last week when the Reserve Bank raised the official cash rate. Since then, other major lenders, including Westpac, ANZ, and ASB, have raised their variable home loan rates. Westpac moved to increase its variable rate within hours of the official cash rate rise last week.

Interest rates for Bank of New Zealand’s fixed rate home loans remain unchanged.

While home loan variable rates will increase on Monday, depositors with Bank of New Zealand will enjoy higher rates too from Monday. Term deposit Interest rates will increase between 0.10% and 0.50% from Monday.

Despite the increase in the home loan variable rates announced today, Bank of New Zealand continues to offer home loan packages that give customers discounted interest rates. This week Bank of New Zealand has introduced the Ultimate Home Loan package in which, subject to conditions, Bank of New Zealand is discounting its variable rate by 0.25% and waiving establishment fees.

Under Ultimate Home Loan, customers must have a minimum home loan of $150,000, and they must take a minimum of 25% of the total value of the loan at the variable rate and the remainder at a fixed rate. In exchange, the variable rate portion of the loan will be discounted 0.25% (to 7.25% from Monday).

Bank of New Zealand spokesperson Owen Gill said: “While variable rates are rising, customers can still buy attractive packages like Ultimate Home Loan. There is good news too on home loan interest rates.”

Ends

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