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Two banks cut key mortgage rates despite hawkish statement

Thursday 9th June 2005

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State-owned Kiwibank and the National Bank have cut home loan rates despite the hawkish statement accompanying the Reserve Bank's decision this morning to keep its official cash rate unchanged at 6.75%

Kiwibank cut its two year rate from 7.50% to 7.35% and National has cut its two, three, four and five year rates. Its two-year rate now stands at 7.65% and the longer term rates are 7.60% each.

The cuts have being made despite the Reserve Bank saying there was little scope for easing rates in the forseeable future, and more stronger-than-forecast economic data could see further hikes.

Kiwibank chief executive Sam Knowles said while Reserve Bank Governor Alan Bollard's accompanying statement might have been hawkish, "given the view of the economy, we don't see much chance of a rate rise".

However, most market commentators appeared to take the central bank's comments more to heart.

Economist Stephen Topliss of the BNZ said the Reserve Bank had "left the door wide open" to a further hike.

But Knowles said there were "always different views in the market". "But clearly if we're going down then we're taking a view that we're not expecting further rate hikes."

"We've always beaten the unbeatable both on the two year rate and on overall costs in terms of the home loan guarantee," Knowles said.

"We see there is the ability in the current market to provide better rates to our customers and continue as we do to provide some of the most competitive margins in the market."

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