Banks cut mortgage rates ahead of OCR decision

Banks moved today to aggressively cut mortgage rates ahead of the Reserve Bank of New Zealand's monetary policy statement on December 4.

State-owned Kiwibank cut its variable home loan rate to 7.95 percent from 8.7 percent, effective immediately for new customers and in two weeks for existing customers.

Earlier today Westpac cut its floating and most fixed interest rates for home loans by 0.75 percentage points. The Westpac standard variable rate is now 8.7 percent.

Kiwibank chief executive Sam Knowles said it was clear there would be a substantial cut to the Official Cash Rate (OCR) in early December and the bank didn't want to sit and wait.

Kiwibank is now offering a six month fixed rate of 7.49 percent, down from 8.29 percent; one year rate of 7.29 percent, down from 7.69 percent and two year rate at 7.59 percent, down from 7.79 percent. These rates require a home owner to have 20 percent or more equity in the property.

Westpac's six month rate is 7.65 percent, while the one year is 7.30 percent and two year rate 7.35 percent, according to interest.co.nz. Westpac has an 18 month special at 7.19 percent.

Westpac New Zealand acting chief executive Bruce McLachlan said the decision followed a significant easing in wholesale rates over the past week.

The Reserve Bank cut the OCR by 100 basis points to 6.5 percent on October 23.

Economists are forecasting the central will cut the OCR by another 50 basis points to 100 basis points on December 4, with some banks putting a 10 to 50 percent chance of a 150 basis point cut.

"This cut is already being priced into the wholesale rates," Mr McLachlan said.

"We are committed to supporting our customers as much as possible during this time, and today's announcement will be great news for many of them," he said.