BNZ has dropped its interest rates in response to today’s decrease in the OCR as follows:
- 20 bps off Standard - from 5.99% to 5.79%
- 10 bps off TotalMoney - from 5.89% to 5.79%
- 14 bps off Rapid Repay - from 5.99%to 5.85%
BNZ Director of Retail and Marketing Craig Herbison announced the changes in the wake of the Reserve Bank signalling further OCR cuts are unlikely until 2018.
"We may have reached the plateau of decreases in interest rates. This change to our floating rates means our customers can chose between our Standard and TotalMoney products. The latter has a lower effective interest rate as it takes into account a customer’s savings and total relationship with BNZ.
If a customer has a $200,000 mortgage and $50,000 in savings, we only calculate interest on $150,000. This means the effective interest rate is 4.79% per annum. A 30-year loan could be shortened by 9 years and 9 months, potentially saving the customer more than $5,000 in the first two years alone," Craig said.
Herbison said this latest cut rounds off what has been a defining year for home owners in New Zealand:
"The pace of change has been notable, not only for floating but fixed. We started 2015 with a one year fixed rate of 5.69%. BNZ made a bold call to cut our one year rate to 4.35% outside of OCR changes. This offered our customers some of the sharpest rates in a generation."
However, he lamented that despite these rates, most New Zealanders aren’t taking advantage and paying off their mortgage faster.
"Our research, conducted by Colmar Brunton, found more than 60 per cent of home owners confess they’re doing nothing about paying off their home loan faster. Interest rate cuts and property prices are making headline news daily, but we’re still taking a ‘she’ll be right’ approach to mortgages.
"If the current rate environment isn’t motivation enough, I don’t know what is. Seventy four per cent of people claim they’re concentrating on reducing and minimising their level of debt, but they’re ignoring their biggest debt," he said.
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