KiwiSaver provider Simplicity announced that it had lowered its first home floating rate to 2.5% - a rate which offers significant competition to the banks, whose floating rates remain substantially higher.
Sam Stubbs, managing director at Simplicity, said that the reduction reflects the current low interest rate environment, where “banks are still taking ordinary, hard-working Kiwis for a ride.”
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“We can do better than that, so that’s what we’re doing,” said Stubbs.
“Our new floating rate is at least 1.5% lower than the banks, and the lowest rate anywhere. It saves someone with a $500,000 mortgage from $30 to $100 a week in interest, which adds up to thousands over the years. And another bonus, is we don’t punish Kiwis for early repayment.
“We want them to get out of debt as fast as possible, not tie them down for maximum financial as the banks currently do.”
Simplicity’s first home loan programme, which was launched in October of last year, is open to existing members who have been with the provider for one year and who qualify for a first home under the rules of KiwiSaver.
Simplicity lends up to 80% of the value of the property, and repayments must work out to be equal or less than 30% of after-tax income.