Kiwibank lowers mortgage rates further

Kiwibank is cutting a number of its home lending rates, but there is a warning that it could weaken the impact of official Reserve Bank cash rate increases if banks continue down this path.

Kiiwbank cuts its three-, four- and five-year fixed rates.

The special three-year rate goes from 5.89% to 5.69%, the special four-year rate from 6.05% to 5.85% and the special five-year rate from 6.29% to 5.99 %.

Standard rates on these terms range from 6.59% to 6.69%. Standard rates are generally intended for borrowers who do not have 80% equity in a transaction.

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Kiwibank is also offering a one-year special offer of 4.95%.

Other banks have also cut rates in recent weeks, despite forecasts that the official exchange rate may need to be raised to at least 4% from the current 2.5% to calm inflation.

The official exchange rate has been predicted to increase by 50 basis points on Wednesday.

Kiwibank cut a number of rates.

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Kiwibank cut a number of rates.

Over the past month, ASB, BNZ, Westpac and ANZ have all cut some of their retail rates, which economists said was possible due to their reduced cost of wholesale funding.

Infometrics economist Brad Olsen said if retail rates continue to fall, it could undermine what the Reserve Bank was trying to achieve and could mean the official exchange rate should be harder to push back.

“Longer-term interest rates have fallen lately, which has reduced bank lending costs. Wholesale rates have fallen by around 25 basis points on average in the first ten business days of August compared to the end of July. Banks are reacting to this drop in funding costs and the pass-through of the reduction to retail tariffs,” he said.

“Further retail rate cuts should worry the Reserve Bank. The Reserve Bank’s goal is to control inflation by reducing the level of economic demand, and they are trying to achieve this by raising the rate of If bank lending rates fall, the Reserve Bank will become nervous about its inflation-fighting strategy.

“In fact, continued retail rate cuts would likely necessitate more interest rate hikes from the Reserve Bank, and reinforce our call that a 75 basis point hike should probably be a live option. on the table this week.”

ICBC and Heartland have the lowest advertised rates in the market over a one-year term at 4.79%.

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