Home lending rate drops

Press, 16 August 1989, Page 8

Home lending rate drops

By PATTRICK SMELLIE in Wellington The Bank of New Zealand has put the acid on other banks to drop their mortgage interest rates, with an announcement yesterday of a 0.6 per cent fall in its own rate-to 14.9 per cent. The move is the first drop in a year of home mortgage rates by one of the big four trading banks. It signals a general move to home mortgage rates of below 15 per cent While many smaller home lenders have been moving their interest rates down in recent weeks, the BNZ move is the most significant fall cic 'e ’he July 27 Budget. Tne move will cost the BNZ very little for the next two months. The change only immediately affects new borrowers; existing borrowers will benefit only from October 15. The BNZ is offering mortgage top-up facilities, a discount for BNZ customers taking out new mortgages when they move house, and a $l2OO administration fee limit. The bank has shuffled its retail deposit rates to be more competitive. The moves were all in line with BNZ’s strategy to become more heavily involved in personal and retail banking, the head of commercial affairs, Mr John Leonard, said. Westpac’s general manager for New Zealand, Mr George Stoopin, said his bank reviewed its rates regularly. He expected Westpac would consider its lending rates again before the next weekly credit meeting on Monday. An assistant general manager with the National Bank, Mr David Stevens, said his bank’s rates were now under review daily. The head of lending for the ANZ and Postßank, Mr David Wolfenden, said the bank’s deposit rates on term investments and customers’ high interest savings accounts had fallen in recent weeks. “We will be reviewing our mortgage rates at the appropriate time,” he said. Other banks also pointed to falls in the interest rates paid on deposits, and the fall in long and short term money market interest rates since the Budget. These are the key to whether mortgage rates fall. The BNZ’s decision not to change rates for existing borrowers for another two months also indicates the bankers’ desire for the cost of money they take in to fall further before they make borrowing ..cheaper.