More interest rate cuts, but no move on fixed-term rates

Banks say their fixed rates are still under review

More interest rate cuts, but no move on fixed-term rates

Banks are continuing to pass on this week’s emergency OCR cut to their customers, with ANZ New Zealand announcing that it is cutting its commercial, business and agri floating term rates, and its flexi and overdraft base rates by 0.75%.

Mark Hiddleston, managing director commercial & agri at ANZ says the OCR cut is “only one” of the factors that went into the decision, and he hopes the cut will help businesses get through this unpredictable time.

“Measures to combat the spread of COVID-19 will impact on many New Zealand businesses, and we’re doing what we can to help them get through this period of uncertainty,” Hiddleston said.

“Businesses may face challenges with cashflow for an extended time. These support measures will help reduce costs and give businesses more flexibility to manage the unpredictable revenue flows.

“While the OCR is only one of many influencing factors on our cost of funds, in these exceptional market conditions following the RBNZ’s emergency rate cut is the right thing for our business customers.”

Hiddleston also urged businesses who are concerned about the impacts of COVID-19 to talk to their bank as soon as possible.

“The sooner we can talk through their individual situation, the better placed we will be to help,” he stated.

Since the emergency OCR cut, all major banks have cut their floating home loan rates - however, few banks have yet made any changes to its fixed-term rates, meaning the vast majority of home loan customers won’t yet benefit from the OCR cut.

Only around 15% of borrowers in New Zealand use a floating rate, preferring a fixed-term rate for its certainty.

An ANZ spokesperson has stated that its fixed rates are currently “under review”, with other major banks echoing a similar message.

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