Bank cutting two-year home loan rate to lowest among big five

Westpac is cutting its two-year home loan interest rates, with the bank’s pending 5.29% advertised special rate set to be the lowest of the five big banks’ popular two-year rates. 

The 0.16% drop kicks in from Monday next week, Westpac said. 

The four other main banks in New Zealand have two-year fixed mortgage rates of 5.39% (Kiwibank), 5.45% (ASB and BNZ) and 5.49% (ANZ), according to interest.co.nz 

However, while the two-year rate is dropping, Westpac’s other home loan rates will rise by between 0.10% and 0.26% from Monday. The bank’s one-year rate is currently 4.99%, and its three-year rate 5.39%. 

Savers would benefit from increases to most longer-term deposit rates by between 0.10% and 0.25% a year, Westpac said. 

The planned changes come as rising geopolitical tensions cause wholesale rates to surge, Westpac NZ’s product, sustainability and marketing managing director, Sarah Hearn, said. 

A third of Westpac's current home lending is on the two-year rate. 

Banks use wholesale rates to fund longer-term lending. 

“Even with today’s rate changes, we’re absorbing a lot of our recent cost increases rather than passing them on to home owners. 

“With the OCR [Official Cash Rate] forecast to rise over the next year, now is a good time to think about your home loan strategy and what options may be best for you.” 

The two-year rate could be a good option for home owners wanting more certainty on repayments, and “potential protection” against rate rise, Hearn said. 

“A third of our current home lending is on the 2-year rate so we know this is a popular term for customers.”