Kiwibank lowers fixed rates, keeps floating steady

By NZPA

Thursday 11th July 2002

Kiwibank, the bank conceived by the Government to act as a check on interest rates, has announced it is lowering all its fixed home loan interest rates.

The bank said it would bring down its rates for new fixed term loans by 0.1 percent, reducing one-year rates to 7.30 per annum. It reduced its rates by the same percentage almost a month ago.

Kiwibank also announced it was bringing in a six-month rate of 6.95 percent and holding its floating rate at 7.10 percent.

Most other banks have raised their floating rates to between 7.75 percent and 8.00 percent in response to the raising of the official cash rate by 25 basis points last week.

Kiwibank chief executive Sam Knowles said the bank was able to hold its floating rate because the benchmark 90-day bank bills had remained stable around 6 percent. He said most banks based their borrowing on 90-day rates, not the official cash rate.

"The reason we can afford to do it is the rates we fund (from) have actually moved down a bit, so I guess the question is not why we've lowered rates is why the others have put rates up."

Mr Knowles said the introduction of a six-month home loan was in response to clear demand for shorter-term fixed rates.

"I guess they feel they don't want to lock in at the top of the market."

Also today, the National Bank raised its floating home loan to 7.95 percent from 7.75 percent per annum, effective from July 12 for new customers and July 30 for existing customers.

Fixed home loans would rise to 7.75 percent from 7.55 percent from July 15.

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