Photo: RNZ/Nate MacKinnon
Borrowers are being told that if they want the best mortgage rates available, they need to ask for “under the covers” discounts.
Since the central bank signalled a more flexible stance in its most recent OCR review, many economists have brought forward their expectations about the timing of a rate cut, with wholesale markets now pricing in a rate cut even sooner.
Westpac Banking Corporation cut some of its short-term interest rates, taking its one-year special rate to 6.89%, followed by ANZ Bank, which also cut its interest rates, taking its one-year special rate to 6.85%.
But Glenn MacLeod, of Edge Mortgages, said that in any case it was just something they had recently been able to access for their clients.
“[They say] “They've lowered the six-month rate from 7.25% to 7.05%, but you're already getting 6.99% or 6.85%. The one-year rate of 6.85% has been with ANZ for maybe eight weeks now, but you can get a better rate from ANZ now anyway.”
Shayna King, director of Loan Market South in Christchurch, another adviser, agrees: She says there are three types of mortgage interest rates: the standard rate, which is available to people who don't have the assets to take advantage of the special rate, the advertised special rate, and a “secret” rate, which is usually lower than the special rate.
“ANZ's 'special advertised rate' is 6.85% but behind the scenes the actual discounted rate has fallen to 6.65% today.”
Squirrel chief executive David Cunningham said the new card rates were in line with what Squirrel brokers had been getting over the past few months.
He said the decline coincided with lower wholesale prices.
MacLeod said banks aren't fighting particularly hard for business at the moment.
Most banks are still offering cashback on new borrowings of around 0.9% of the loan amount.
Cunningham said a “mortgage war” in which banks would desperately try to win new business was unlikely until the housing market recovered. “That may be in 2025.”