BNZ cuts rates in line with other banks
(24 May 2012 – New Zealand) The Bank of New Zealand (BNZ) cut most of its fixed mortgage rates on Wednesday, to remain on par with cuts made by other banks over the past two weeks.
The European debt crisis had caused a slump of 50-80 basis points in wholesale interest rates in the past six weeks, hitting expectations for growth and inflation globally.
This slump, combined with bank profit margins rising around 40 basis points in the past two years because of a massive shift in customers from less profitable fixed mortgage rates to more profitable floating rates.
Banks are now in a much more competitive mood thanks to these bolstered profit margins and a surfeit of cash on their now much stronger balance sheets.
They are also trying to fire up profit growth through increased lending, given annual lending growth has slumped from 10-15 percent through the mid-2000s to 2 percent in 2012.
BNZ already had the lowest 18 month mortgage rate of 5.10 percent, but this morning it cut its one year rate by 50 basis points to 5.25 percent and cut its two year rate by 24 basis points to 5.65 percent.
It cut its three year rate by 40 basis points to 5.75 percent, its four year rate by 40 basis points to 6.10 percent and its five year rate by 40 basis points to 6.50 percent.
BNZ's one to five year rates are in line with the other major banks.
BNZ also slashed its seven year fixed mortgage rate by 56 basis points to 6.99 percent. It is the only major bank offering a seven year fixed mortgage rate. It left its six month mortgage rate unchanged at 5.75 percent.
This slump, combined with bank profit margins rising around 40 basis points in the past two years because of a massive shift in customers from less profitable fixed mortgage rates to more profitable floating rates.
Banks are now in a much more competitive mood thanks to these bolstered profit margins and a surfeit of cash on their now much stronger balance sheets.
They are also trying to fire up profit growth through increased lending, given annual lending growth has slumped from 10-15 percent through the mid-2000s to 2 percent in 2012.
BNZ already had the lowest 18 month mortgage rate of 5.10 percent, but this morning it cut its one year rate by 50 basis points to 5.25 percent and cut its two year rate by 24 basis points to 5.65 percent.
It cut its three year rate by 40 basis points to 5.75 percent, its four year rate by 40 basis points to 6.10 percent and its five year rate by 40 basis points to 6.50 percent.
BNZ's one to five year rates are in line with the other major banks.
BNZ also slashed its seven year fixed mortgage rate by 56 basis points to 6.99 percent. It is the only major bank offering a seven year fixed mortgage rate. It left its six month mortgage rate unchanged at 5.75 percent.
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