Bank passes on OCR reduction across fixed and floating loans
Westpac NZ has responded quickly to the Reserve Bank’s latest rate cut, unveiling a new special 4.95% p.a. home loan rate across one-, two-, and three-year terms.
The changes take effect today, offering welcome relief to borrowers as the central bank continues its monetary policy easing cycle.
The move comes after RBNZ cut the OCR by 25 basis points to 3.25% at its May meeting, marking the second consecutive reduction.
Market-leading fixed rate aims to support borrowers
Sarah Hearn (pictured), Westpac’s general manager of product, sustainability and marketing, said the move gives customers a simple, competitive offer.
“With record levels of home loans rolling off fixed rates over the next month, our new three-year special home loan rate shows we are committed to offering compelling rates to benefit existing customers and attract new ones,” Hearn said.
Three-year rate undercuts major bank rivals
Westpac said the 4.95% special is the lowest three-year fixed rate among the five largest banks based on advertised rates as of 3pm yesterday. The offer significantly undercuts the 10-year average fixed rate of 5.4% p.a.
The bank is also adjusting floating and business lending rates in line with RBNZ’s 0.25% OCR cut, with a 0.15% reduction to its variable home loan rate. Since July 2024, Westpac’s variable rates have dropped by more than 2% p.a.
“Most variable business lending rates are being reduced, in line with the 0.25% OCR change,” Hearn said.
OCR cut signals easing cost pressures for households
Hearn welcomed the RBNZ’s rate cut as a sign of improving economic conditions after years of pressure from high inflation and borrowing costs.
The latest “OCR cut should give consumers confidence that cost pressures are continuing to ease after several years of elevated inflation and interest rates,” she said.
“We’re working hard to support the expected economic recovery over the second half of this year, which means offering great products, services and digital functionality, alongside competitive rates.”
Mortgage serviceability rate lowered
In a further sign of easing lending conditions, Westpac also announced a reduction in its mortgage serviceability rate, moving from 7% down to 6.85%.
