Over the last few days, three of New Zealand’s top banks have announced a reduction in their home loan rates. All this while multiple central banks across the world hike interest rates in an attempt to tame inflation. ANZ, BNZ, and Westpac have all recently slashed their home loan rates, easing a bit of pressure on borrowers.
ANZ reduced its special one-year rate from 5.35% to 4.99% and lowered its 18-month rate from 5.65% to 5.29%. Standard rates on home loans where borrowers had less than 20% equity dropped by 20 to 36 basis points for terms between 6 to 18 months. Three-year special and standard rates also dropped by 30 basis points to 5.69%.
ANZ stated that it would be passing on savings to its customers where possible, even with the volatile wholesale rates and unexpected hikes to the OCR. The bank confirmed it would continue to review its interest rates in response to local and international market conditions. ANZ is yet to announce any reduction in term deposit rates.
Kiwibank was the first to announce a reduction in home loan rates at the start of August with their one-year fixed home loan rate dropping to 4.95% from 5.19%. Its standard rate for those that do not qualify for this special rate will also drop from 6.19% to 5.95%.
BNZ’s one-year rate on its Classic Home Loan dropped from 5.35% to 4.95%. The three-year rate was lowered from 5.99% to 5.69%, while the five-year rate fell from 6.19% to 5.99%. This applies to borrowers who have more than 20% equity in their properties. Westpac announced a reduction in its six-month to five-year rates, with the biggest cut of 40 basis points going to its one-year rate which is now at 4.95%.
In more good news for borrowers, the government is seeking to further loosen new consumer lending regulations. Commerce and Consumer Affairs Minister, David Clark, has announced plans intended to make it easier for people to access loans. This includes narrowing discretionary expenses by lenders, reducing double counting of expenses for revolving credit contracts, and making debt refinancing or consolidation more accessible.
The changes are expected to take effect from March 2023. This spate of changes was inspired by complaints from various stakeholders, including banks, mortgage brokers, and borrowers, who expressed dissatisfaction with the new regulations and the Responsible Lending Code under the updated Credit Contracts and Consumer Finance Act (CCCFA) Act that were instituted in December 2021. Some of the problems highlighted included borrowers that passed affordability tests being declined credit and being subjected to intrusive inquiries.
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