Key Facts

  • ANZ, New Zealand’s largest bank, has announced a cut in some of its home loan rates.
  • The changes, made to reflect the recent decrease in wholesale swap rates, will be effective from tomorrow.
  • The standard rate for a two-year fixed-term home loan has been cut by 20 basis points from 7.69% to 7.49% p.a. and the three-year fixed-term home loan rate has been reduced by 14 basis points from 7.49% to 7.35% p.a.
  • ANZ economists have advised that shorter term fixes may be more attractive for borrowers.
  • Interest rates will continue to be reviewed in accordance with international and local market conditions.
  • The bank’s term deposit rates have also been adjusted: the rate for a two or five-year term reduced by 25 basis points to 5.75% and 5.20% respectively while a four-year term has decreased by 15 basis points to 5.30%.

Article Summary

ANZ, New Zealand’s leading bank, has announced a reduction in several home loan rates effective tomorrow, reflecting the recent drop in wholesale swap rates. For instance, the rates for a two-year and three-year fixed-term home loan will decrease by 20 and 14 basis points, respectively, bringing them down to 7.49% and 7.35%. ANZ economists had previously stated that there is an expectation of reduced mortgage rates making the next move.

Shorter-term fixes may remain more attractive for borrowers in a falling interest rate environment, according to the economists. They further recommended a strategy of fixing for just six months, which serves as an affordable proxy for floating, and then re-fixing at expiry. They did note that while longer-term rates may be cheaper and bring more certainty, one would need to value that certainty highly to fix for more than six months now considering the possibility of further rate reductions.

As an ANZ spokesperson points out, interest rates will continue to be reviewed in response to international and local market conditions, taking into account factors such as the impact on customers, the underlying cost of funds including wholesale rate movements, and competitor activity. Alongside this, reductions in term deposit rates have been announced, with rates for two or five-year terms declining by 25 basis points to 5.75% and 5.20% respectively, and a four-year term witnessing a 15 basis point decrease to 5.30%.

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