New Zealand’s major banks have moved swiftly in lowering mortgage lending rates after the Reserve Bank cut the Official Cash Rate (OCR) today.

The OCR was cut 25 basis points from 5.5% to 5.25%. It is the first cut since March 2020 and a positive move for homeowners under pressure from high interest rates.

All major banks – ASB, ANZ, Westpac, BNZ and Kiwibank – had been cutting their interest rates over the past month before today’s decision, as wholesale rates dropped and markets started pricing in cuts to the OCR this year.

Kiwibank was first to move today, minutes after the Reserve Bank’s decision was released.

Kiwibank said it was decreasing its home loan and business variable lending rates by 0.25% [25 basis points (bps)].

“In the current high interest rate environment, we understand that any decrease in lending rates can lead to meaningful savings on loans and mortgages, enhancing affordability and financial flexibility for our customers,” Kiwibank chief customer officer – business, Elliot Smith said.

Meanwhile, ASB reduced all of its fixed home lending rates from between 10-34bps.

ASB’s one- and two-year home loan rates fell 26bps to 6.59% and 5.99% respectively.

Its six-month rate decreased 10bps to 6.89% and the 18-month term was lowered 34bps to 6.15%.

ASB also lowered its variable home loan rate by 25bps from 8.64% to 8.39%, while the Orbit rate dropped from 8.74% to 8.49%.

Jax Mitchell, ASB’s general manager wealth, insurance and partnerships, said today’s OCR decision and ASB’s rate adjustments would be welcome relief for many New Zealanders.

“The decreases to our floating mortgage rates, as well as our business banking rates, will help alleviate some of the pressure being felt by some of our homeowners, as well as our rural and business customers,” Mitchell said.

“The recent falls to wholesale rates also mean we’re able to reduce our fixed home lending terms. This is the 12th time since November we’ve lowered our fixed mortgage rates, which more than 90% of our customers hold, and will be good news for those customers refixing soon as well as prospective homebuyers.”

ANZ’s floating and flexible home loan rates will drop 10bps to 8.39% and 8.50% respectively.

Grant Knuckey, ANZ NZ managing director for personal, said the market had priced in a lot of easing over the next year.

“The New Zealand economy is still doing it tough and global markets remain volatile. But for the average borrower we do expect conditions to improve from here,” Knuckey said.

Knuckey said when reviewing interest rates, the bank considered a range of factors, including the OCR and changes in wholesale interest rates and the need to balance the needs of borrowers and savers.

ANZ was also decreasing its Serious Saver rate by 10bps and its call savings accounts by 25bps.

The Reserve Bank said this afternoon annual consumer price inflation was returning to within the Monetary Policy Committee’s 1 to 3% target band.

The committee said while official economic statistics had evolved in line with expectations in the May Monetary Policy Statement, a broad range of indicators pointed to a “material weakening in domestic economic activity” in recent months.

The Reserve Bank’s new forecast rate track suggests the OCR will fall from here to at least 5% by the end of the year and to at least 4.5% by June next year.