BNZ and Kiwibank have followed other major banks in lowering variable mortgage rates following yesterday's major OCR cut.
Yesterday the Reserve Bank chose to slash the Official Cash Rate by 50 basis points - down to 2.5% - while also signalling it would be "open" to further cuts in the medium-term.
Following the decision, the country's largest bank, ANZ, made changes to some of its variable rates alongside Westpac, which also made changes to one of its fixed-rate options. ASB also made cuts.
Today, BNZ announced it would drop its standard variable rate loans from 6.29% to 5.99%.
Fifty point cut after ‘considerably larger than expected” second quarter GDP reading. (Source: 1News)
It also lowered its total money variable rate loans, mortgage one and rapid repay loans from 6.39% to 6.09%.
These changes were effective from October 16.
It did not make any changes to fixed mortgage rates, having recently adjusted some ahead of the OCR decision earlier this week.
Kiwibank followed suit this morning, dropping some variable home lending terms and deposit rates.
Its variable term loan and offset variable term loan would both be lowered from 6.15% to 5.80%. The revolving loan dropped from 6.20% to 5.85%.
The new rates were effective from October 13 for new lending, and October 28 for existing lending.
Also from October 13, the 90-day notice saver and 32-day notice saver deposit rates were both lowered to 2.35% and 1.80% respectively.
Finance Minister speaks following OCR decision
Speaking to Breakfast, Finance Minister Nicola Willis said yesterday's decision could be felt by some New Zealanders and businesses as soon as "this or next week".
Willis said Kiwis on a floating cash rate for their debt would face lower repayments, "which will mean more money available to spend on the things they wish to spend it on, to save it if that's what they prefer”.
"So for some businesses, it'll mean their debt cost less in the future. For mortgage holders, it means that they'll switch on to lower interest rates and have more choices about their spending. So they'll feel that."
She said the Reserve Bank's forecast of growth in the economy "would be expanding over the coming months”.
The Finance Minister told Breakfast that with inflation under control, the Reserve Bank could bring interest rates down. (Source: Breakfast)
"They forecast that we've come through what was the worst quarter and things are going to get better over the future. Treasury is also forecasting that, the commercial banks are forecasting that, so it's not just the government forecasting that."
Why the Reserve Bank's rates call is beyond what some expected — watch on TVNZ+
Willis said although interest rates began falling in August last year, due to the "transmission of monetary policy" it would take a while for New Zealanders to feel the economic benefits come through.
"This is the Reserve Bank doing its job. When inflation gets out of control, as it did, it has no choice but to hike up interest rates. And that has a really strangling effect on the economy, and we saw that, and then their job is to bring interest rates down," she said.
She said now that inflation was under control, the Reserve Bank could bring interest rates down which would "flow through into the real economy".
"What has been proven time and time again is that when reserve banks do this, you start seeing a couple of things next. You see people spending more, businesses investing more jobs being created and incomes growing. So that's what we expect to see.”
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