Kiwibank slashes one-year mortgage to new low

The state-owned bank, led by Steve Jurkovich, has cut its one-year rate from 3.55%, effective from Monday November 18. 

The offer is only available to borrowers with at least 20% equity and will be available for a limited period.

Kiwibank’s variable home loan rate remains the same at 5.15%, while its two-year fixed rate is increasing from 3.45% to 3.55%.

The cut comes despite an increase in wholesale borrowing rates in the aftermath of the Reserve Bank's decision to keep the OCR at 1%. It could prompt other banks into a price war on shorter term mortgages.

"Implications from the ‘no rate change’ decision were that wholesale rates increased. It’s likely we’ll be the outlier reducing our one-year home-loan rate but that is a position we’re comfortable to hold,” said Chris Greig, Kiwibank general manager for borrowing and savings.

“We’re keen to see a continuation in the momentum we’ve had in growth over the past year as more New Zealanders choose to bring their banking to Kiwibank," Greig added.

Kiwibank has taken aggressive steps to build lending business in recent weeks, and is offering a $3,000 cash-back for customers that borrow more than $250,000.