Banks follow OCR down

 Governor Graeme Wheeler cut the rate from 3% to 2.75%– a move that had been predicted by the markets.

A flurry of rate cuts followed.

Kiwibank made immediate cuts to its variable and floating rates – taking its floating rate to 5.9% from 6.15%.

ANZ dropped its floating rate to 5.99%.

Westpac cut its variable rate to 6%. It is also running a two-year special of 4.69%.

Earlier, BNZ and ASB rolled out specials of 4.35 per cent for one-year fixed rates.

Some commentators, such as David Hart of Loan Market and Squirrel’s John Bolton have suggested this is about as low as interest rates are likely to fall.

But others say there is some room yet to move.

Mortgage adviser Bruce Patten warned against taking a one-year term. He said borrowers could find the term expired just as rates started to rise again.

“A year is a long time in finance,” he said.

Patten suggested five-year rates could fall below 5%.  The best rate on offer at the moment is 5.09% from ASB.

“If we’re going to end up in a position similar to Australia, in Australia you can get a five-year rate for 4.39%,” Patten said. “We haven’t seen the bottom yet, in my opinion.”