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ANZ, Westpac limit mortgage rate cuts

NZ NewswireNZ Newswire 11/08/2016 Edwin Mitson

A pedestrian walks past a Westpac Bank. © David Gray / Reuters A pedestrian walks past a Westpac Bank. Two of New Zealand's major banks have rewarded savers more than borrowers in the wake of the cut to the official cash rate by upping the interest rate for deposits while making more modest reductions to mortgage rates.

Governor Graeme Wheeler cut interest rates to a record low of 2 per cent from 2.25 per cent.

He later told a briefing that the central bank "would like to see most of it passed on; It's up to the banks to work out what they want to do - lower lending rates or attract more deposits through higher deposit rates."

Westpac cut its floating mortgage rate by 10 basis points or 0.1 per cent to 5.65 per cent. The rate will be effective from the Aug. 12 for new lending and from Aug. 31 for existing borrowers.

It has introduced a special six-month term deposit rate of 3.5 per cent, a rise of 50 basis points or 0.5 per cent.

Earlier ANZ cut its floating mortgage rate by 5 basis points.

Rates for commercial, agri and business lending were reduced 15 basis points, while at the same time it lifted some term deposits 30 basis points.

State-owned Kiwibank has moved to pass the rate cut on to borrowers to a greater extent.

It has reduced its home loan variable rate by 0.2 per cent to 5.25 per cent, while its offset rate will fall by 0.25 per cent to 5.25 per cent and its revolving home loan rate by 0.2 per cent to 5.3 per cent.

The rates will be effective from Aug. 15 for new customers and from Aug. 29 for existing borrowers.

Bank of New Zealand and ASB Bank have yet to respond to the cut to the official cash rate.

New Zealand's banks have raised deposit rates to try to secure greater domestic funding for the loans they issue, rather than borrow the money abroad, where the cost is more volatile and can be driven up by instability from events like Britain's vote to leave the European Union.

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