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Kiwibank cuts two-year rate

Thursday 25th September 2008

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Kiwibank has upped the ante in the home loan market dropping its two-year rate in anticipation that another OCR cut is coming.

Its new rate is 7.99%, compared to rates of between 8.70% and 8.90% for other trading banks. (Check and compare home loan rates at www.goodreturns.co.nz)

Kiwibank chief executive Sam Knowles said the bank was “jumping the gun” on an expected cut in the official cash rate late next month.

“Rates are coming down, but for many home loan owners the falls have been too little and too slow.

“There are a lot of homeowners who have loans due for renewal over the next couple of months,” Knowles said.

He added that the lower rate would enable a significant proportion of New Zealanders with loans to refix their mortgages at about the same repayment level that they were on two years ago when there was intense competition on rates between the banks. Kiwibank has been able to lead the home loan rate between the banks because of its high level of domestic funding.

“We are able to utilise the very high level of deposits we are receiving to fund our home loan lending. Alternative sources of funding from the international wholesale markets are much more expensive,” Knowles said.

Check and compare home loan rates at www.goodreturns.co.nz

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