Homeowners benefit from low interest rates

Monday, 14 October 2019

ANZ has cut the rates on some of its fixed-term mortgages.

Its six-month fixed mortgage rate will drop to 3.65 per cent and its two-year fixed special rate to 3.45 per cent from October 15.

Its one-year rate will be 3.55 per cent.

'As New Zealand's largest home lender, we're committed to helping Kiwis into their own homes,' said Ben Kelleher, acting ANZ managing director retail and business banking.

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'There is still strong demand for housing in New Zealand and, as we head into summer, now is a very popular time for Kiwis to start looking at buying new homes.

'We want to make sure we are supporting customers into their own homes so we're cutting rates across a range of terms to suit different home buyers' situations.

'The current extreme low interest rate environment not only represents an opportunity for new home buyers to enter the market, but for existing home loan customers to pay off as much of their debt as possible.'

These aren't the lowest rates in the market - China Construction Bank is offering a special rate of 3.19 per cent for terms of one, two and three years.

The official cash rate (OCR) is at 1 per cent and economists predict it could drop to 0.5 per cent before it increases again.

ASB chief economist Nick Tuffley said fixing for short terms would give borrowers flexibility while still offering a cheap rate.

'But it depends on what special offers are around at the time. The two-year rate is lower than the one year, and implicitly already factoring in a 0.5 per cent OCR given where market pricing has got. So that rate already provides a lot of the benefit of the anticipated OCR cuts, though at the trade-off of missing out if the Reserve Bank cuts even more aggressively.'