The new price, effective today, represents a cut of 20 basis points. It is the cheapest mortgage rate offered by a major New Zealand lender.
The sharpened Westpac price represents the first big move from Kiwi lenders since the New Year, with the Reserve Bank's monetary policy measures further expected to push down borrowing costs and rates.
Westpac's new offer is available to customers with a 20% deposit buying a home they intend to live in.
Gina Dellabarca, Westpac NZ's general manager of consumer banking and wealth, says the bank wants to help home buyers.
“We know property ownership has probably been a hot topic for many Kiwi families over the holiday period, so whether you’re looking to buy your dream home in 2021 or just pay off your mortgage a bit faster, this special rate could help you get there.”
“Two years ago the same special home loan rate over the same term was 4.15%. It would have cost $1,119 a fortnight to service a $500,000 mortgage over 30 years. Now, the lower interest rate means the same repayment would be $885 a fortnight – a saving of $6,084 over a year.”
Dellabarca said one year terms were currently the most popular with borrowers.
“We especially look forward to talking to first home buyers about how we can support them to reach their home ownership goals and this rate can certainly help them. We assisted first home buyers into more than 5,300 new homes in the 12 months to September 2020, a 7% increase on the previous year with many accessing their KiwiSaver first home-buyer withdrawal option to help them with their deposit.
“Existing mortgage customers who are due to renew their loan will also be able to take advantage of the new rate. It will give them the flexibility of moving to lower repayments or staying with their current repayments which will shorten the life of their loan.
“We’re keen to talk to both existing and new customers about this exciting new rate through our mobile mortgage team or our in-branch or contact centre banking specialists.”
The aggressive price cut is likely to trigger a new wave of cuts for home loan borrowers.
Westpac's new one year rate isn't the cheapest one-year rate in the market, however.
Kāinga Ora's first home buyer special is just 2.25% for one year, while HSBC Premier customers can access one year home loans at the same rate. Heartland's digital mortgage offers one year loans at 1.99%.
