Banks drop mortgage interest rates following RBNZ's cut to OCR
By Suze Metherell
Sept. 10 (BusinessDesk) - Kiwibank, ANZ Bank and Westpac Banking Corp have all matched the Reserve Bank of New Zealand's cut to the official cash rate, reducing floating mortgage rates a quarter of a percent in a "competitive" home loan market.
Governor Graeme Wheeler cut rates to 2.75 percent as expected and said further easing seems likely but also telegraphed a rebound in tradables inflation because of the weak kiwi dollar and a pickup in crude oil prices. The banks were quick to follow suite, all matching the central bank's 25 basis point cut.
State-owned Kiwibank reducing its floating rate to 5.9 percent, from 6.15 percent, ANZ lowered its floating rate to 5.99 percent, while its flexible home loan decreased to 6.1 percent. Westpac lowered its floating mortgage rate to 6 percent, which it said reflected to "competitive" home loan market.
"With record low interest rates across the market those looking for a home loan have competitive options on fixing for security, floating for flexibility or a mix of both," Westpac said in a statement.
Auckland's booming housing market, where demand from record migration has outstripped supply, has been a point of concern for Wheeler, as accelerating prices in the country's largest city may affect financial stability. The central bank has introduced lending restrictions in order to combat any overheating in the real estate market.
House prices in Auckland “continue to increase rapidly and are becoming more unsustainable,” Wheeler said. It “will take some time” before a rise in residential construction in the country’s biggest city is able to correct the imbalance, he said.