ANZ Bank has announced a number of rate changes in response to the Reserve Bank's announcement this morning that the official cash rate has dropped to 2%.
ANZ cut 0.05% p.a. on its floating home loan rate to 5.59% p.a., effective Monday 15 August 2016 for new loans and Monday 29 August for existing loans.
The bank is also lowering its flexible home rate by 0.05% p.a. to 5.70% p.a., effective Monday 29 August for new and existing loans.
It is hiking rates for some term deposits by up to 0.30% p.a. to 3.60% p.a. as ANZ New Zealand CEO David Hisco said today the bank is refocusing its lending and borrowing emphasis.
“On the deposits side, we have five times as many customers as those with home loans. Lifting term deposit rates will help customers grow their savings,” Hisco said.
“We are sending a strong signal today to New Zealanders that at a time of record low interest rates, it is more responsible to pay down home loans and save, than borrow more. New Zealanders need to consider changing their financial strategies.”
In support of first home buyers ANZ also today launched a special home loan package for first home buyers using KiwiSaver.
It will include a 0.20% p.a. discount on the prevailing ANZ standard variable interest rate and access to ANZ Buy Ready, a comprehensive set of tools, resources and special benefits to help people through the house purchase process.
“The Reserve Bank’s decision to cut the OCR to try and drive the New Zealand dollar lower is the right move to protect our export industries which employ many Kiwis,” Hisco said.
“Dramatically lowering lending rates would only throw fuel on the fire in an overheated housing market. That would be irresponsible and negate any economic benefit to New Zealand and drive up the country’s debt as banks seek expensive offshore funding for increasing home loan books.
“While this may mean we write fewer investment loans, we believe it is the right thing to do.
“Meanwhile, we still want to help first home buyers and commercial, agriculture and business customers.”
Reserve Bank Governor Graeme Wheeler
said at a media conference this morning the Reserve Bank would like to see the banks pass most of the cut on to customers.
But when asked if he was surprised at ANZ only passing on five basis points this morning, he said, "It's up to ANZ and it's up to the other banks to work out how they want to handle this in a competitive market."
He also said the Reserve Bank had not seriously considered a 50bp cut as they didn't believe it was justified but had built into their projections 60bps of interest rate cuts.
"If you look at the economy, it's forecast to be growing at around 3.5% over the next two years. We've indicated that we do want to get back into the inflation target range and we want to head back towards the midpoint.
"Time will tell whether we need more or whether we need less but at this point we didn't think we needed to go out with a 50bp cut."