Thursday 11th August 2016
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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 percent from 2.25 percent. 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 percent to 5.65 percent. 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 percent, a rise of 50 basis points or 0.5 percent.
Earlier ANZ Bank New Zealand, the country's biggest lender, 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 percent to 5.25%, while its offset rate will fall by 0.25 percent to 5.25 percent and its revolving home loan rate by 0.2 percent to 5.3 percent. 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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