In a bold move, Westpac has slashed its mortgage rates for the second time in three weeks, undercutting its rivals and offering some of the lowest home loan rates on the market. This latest reduction means Westpac now has the joint-lowest advertised special rates among the five major banks for one- and 18-month terms, as well as the lowest rates for three- and four-year terms.
Significant Mortgage Rate Reductions
Westpac’s five-year fixed rate has seen the most substantial change, dropping by 40 basis points (bps) to 5.99% (special) and 6.59% (standard). Other notable rate cuts include:
- One-year fixed rate falling by 4bps to 6.85% (special) and 7.45% (standard)
- 18-month rate dropping by 14bps to 6.65% (special) and 7.25% (standard)
Sarah Hearn, Westpac New Zealand’s General Manager of Product, Sustainability, and Marketing, emphasized the bank’s commitment to passing on the benefits of lower wholesale rates to customers. “This will be welcome news for customers due to refix their home loans in the near future,” Hearn stated. “While the shorter terms are very popular at the moment, some homeowners still prefer the option of locking in more certainty with a longer rate, and we’re pleased to now be offering a five-year advertised special rate below 6%.”
Westpac is also cutting term deposit rates for its eight-month to five-year offerings, with reductions ranging from 10-30bps.
Competitive Moves from Other Banks
ASB joined the rate cut fray earlier this week, becoming the first major bank to have all its fixed mortgage rates under 7% since June last year. ASB’s six-month rate dropped 25bps from 7.14% to 6.99%, and its one-year fixed rate fell 29bps to 6.85%. For a borrower with a $500,000 mortgage over 30 years, the drop in the one-year rate equates to about $20 a week. ASB also reduced its five-year rate by 40bps to 5.99%.
Last week, ANZ, BNZ, and Kiwibank also made significant changes to their home loan rates. ANZ cut mortgage rates across all its standard fixed terms from six months to five years, along with some special rates. Kiwibank lowered its fixed special and standard home loan rates across all terms from six months to five years, with its one-year special rate dropping by 14bps to 6.85%. BNZ reduced all its classic home loans by 16-30bps, with its six-month rate dropping by 19bps to 7.05% and its one-year rate falling by 29bps to 6.85%.
Impact on the Market
These rate cuts follow the latest Consumers Price Index (CPI) data showing a decline in inflation towards the Reserve Bank’s target of 1-3%. Inflation was 3.3% in the year to June 30, compared with 4% in the 12 months to the March 2024 quarter. This followed a softer tone from Reserve Bank Governor Adrian Orr in his latest Monetary Policy announcement, where the Official Cash Rate (OCR) remained on hold at 5.5%.
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