Westpac, one of the country's largest banks, has cut its home loan rates for the second time in three weeks.
Major banks have all trimmed their rates in the past two weeks. The drops come after the latest data showed the rate of inflation dipping.
A spokesperson for Westpac said: "Today's changes mean Westpac has the joint-lowest advertised special rates of the five major banks on the popular 12-month and 18-month terms, and the outright lowest on the three and four-year terms.
"Overall, the bank has reduced its advertised special home loan rates across all terms by between 0.1% and 0.4% since the start of July."
The standard rate for a one-year fixed-term home loan would be reduced by four basis points from 7.49% to 7.45% per annum. The special rate would be 6.85% per annum.
The standard rate for a two-year fixed-term home loan with the bank will be cut by 26 basis points from 7.35% to 7.09% per annum. The special rate would be 6.49% per annum.
The bank is also decreasing a range of term deposit rates by between 0.1% and 0.3%.
Westpac New Zealand product and marketing general manager Sarah Hearn said wholesale rates have fallen and the bank is passing that on to customers.
Business Correspondent Katie Bradford takes a look at what it means for households and interest rates. (Source: 1News)
"This will be welcome news for customers due to re-fix their home loans in the near future," she said in a media release.
"While the shorter terms are very popular at the moment, some homeowners still prefer the option of locking in more certainty with a longer rate, and we’re pleased to now be offering a 5-year advertised special rate below 6%."
The changes will be effective from tomorrow.
OCR cut tipped for later this year
The change follows the release of Stats NZ figures last week showing the annual rate of inflation has fallen to its lowest level in three years, with only a 3.3% rise in the 12 months to the June quarter — close to the Reserve Bank's 1-3% target range.
Bank economists are now predicting a cut in the official cash later this year.
EnableMe founder Hannah McQueen said the economic outlook painted by RBNZ is a "game changer". (Source: 1News)
ANZ economists had previously forecasted interest rate cuts would start from February.
But in a research note released last week, it said: "We have brought forward our forecast timing of the first 25bp [basis point] cut in the official cash rate to November, rather than in February."
It said the fall was more likely to come earlier than later and that it then saw a series of cuts to follow, all the way down as far as 3.5%.
ASB went further, saying: "The remaining OCR decisions over 2024 are effectively 'live' and cuts could start as soon as next month."
Kiwibank gave its assessment: "We still think inflation is on track to fall below 3% in the current quarter. And today's progress on core inflation has us growing in confidence that the RBNZ's 2% target will be achieved in 2025. Rate relief is on its way."
The Reserve Bank has been aggressively taming inflation and spending in the economy, over the past two years, by hiking the official cash rate and interest rates.
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