ASB and BNZ are the last of the major banks to respond to the Reserve Bank’s announcement yesterday of a 0.25% cut to the cash rate, which now stands at 2%.
ASB has lowered its standard variable home loan rate by 10bps from 5.65% p.a to 5.55% p.a., effective Wednesday August 17 for new customers, and Wednesday August 24 for existing customers.
It also raised its headline 18-month term deposit rate by 45bps to 3.65%.
ASB’s executive general manager for retail and business banking, Ian Park said they had carefully considered the current environment in adjusting their rates.
“In relation to offshore borrowing, wholesale funding costs have been steadily increasing over the last six months, with one of the drivers being the global market volatility associated with concerns around slowing global economic growth, and international events such as Brexit,” said Park.
“At the same time, domestic term deposit interest rates have not been falling in line with reductions in the OCR, which has continued to increase costs for banks.
“The changes we are announcing today will ensure we offer highly competitive investment products combined with reduced home loan rates which are now at their lowest ever level, all while holding appropriate capital reserves.”
BNZ also announced today a reduction in its floating mortgage rate and a hike in its deposit rate, the NZ Herald reports.
BNZ said in a statement this morning that it would drop its floating home loan rate by 0.05% to 5.64% and increase its 18 month term deposit rate by 0.30% to 3.6%.
BNZ's director of retail and marketing Craig Herbison, "There are a range of factors that influence whether bank increases or decreases its interest rates and the OCR is one of those.
"Other considerations are costs, the volatility of offshore markets and the requirement to hold greater capital.
ANZ was first to announced changes yesterday
, with Westpac and KiwiBank following
later in the day.
KiwiBank is the only lender so far to have passed on the full 0.25% cash rate cut on some of its rates, as ANZ
's chief economist Cameron Bagrie's prediction proves correct
that the banks would not pass on any OCR reductions in full.