Kiwibank lowers floating/fixed rates

By NZPA

Friday 9th August 2002

Banking minnow Kiwibank said today it was slashing its variable home loan rate to 6.95 percent -- more than one percentage point lower than the other main banks.

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 to 5.75 percent last month.

The reduction, effective from August 12, will save homeowners more than $1000 a year on a $100,000 loan.

Kiwibank is also lowering its fixed rates for new loans by 0.15 percentage points. The rate for a one year fixed term at the bank will fall to 7.15 percent; two year to 7.35 percent; three year to 7.55 percent; four year to 7.65 percent; and five year to 7.70 percent.

Kiwibank chief executive Sam Knowles said the changes wer e made in response to a drop in the 90-day bill rate -- from which banks fund their loans.

Mr Knowles said other banks used a fall in the bill rate to fatten their margins, but Kiwibank's philosophy was to pass on any savings to the customer.

"We are committed to delivering a fair deal to our customers. That means when we can cut the rates, we will do so. And we will do it quickly," he said.

Kiwibank operates at a margin of about 1.15 percentage points to the 90-day rate, while the bigger banks had margins of about 2.15 percentage points, Mr Knowles said.

Ninety-day bills were at 5.88 percent by late morning today, against a peak of 6.07 percent in mid-July.

Kiwibank, launched last year by the Government to provide a low-cost banking alternative to the mainly Australian-owned banks, is currently attracting about 500 new customers a day, Mr Knowles said.

It has over 250 branches around the country, operating out of New Zealand Post outlets.

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