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Westpac has teamed up with banks offering home loan rates below 3%.
Mortgage competition continues as banks offer mortgage loan borrowers the lowest rates on record.
TSB now offers a one-year mortgage loan rate of 2.89 percent.
It is available to new and existing customers who have a capital of at least 20 percent.
Westpac has also cut rates: Its two-year special has dropped to 2.99 percent.
READ MORE:
* Fixed-term borrowers only get a fraction of the official cash rate cut
* Warning to borrowers: be careful what you want in interest rates
* All major banks offer less than 4 percent, should you lock your mortgage?
It follows a move by Kiwibank and ASB last week to move home loan rates below 3 percent for the first time.
Edge Mortgages mortgage broker Glen McLeod said borrowers were experiencing the impact of the coronavirus pandemic.
“If Covid-19 hadn’t turned up, I don’t think we would have seen rates drop. Banks are just starting to react. Like all companies, they need to make a profit, so at some point they have to try to attract the customer to borrow, ”he said.
But he said that actually getting the loan could be a challenge for borrowers.
Although loan-to-value restrictions have been lifted for the coming year, banks are being cautious about their new loans, McLeod said.
He said determining whether it was worth locking out a longer loan term was a borrowers decision.
“As New Zealand heads into recession, the Reserve Bank may need to analyze more stimuli. Rate reductions can be a part of the overall solution, it is very difficult to determine how far they will go. Could a sub 2.5 percent be possible? Possibly, but don’t trust it. “
Nick Tuffley, chief economist at ASB, said the rates offered were “pushing the limit” on how far they could fall.
“For substantially lower interest rates we would need one of two things: the Reserve Bank to accelerate the current rate of purchase of government bonds, beyond simply raising the designated amount of bonds to be purchased, which is likely to raise on Wednesday, or we should see the Reserve Bank reduce the Official Cash Rate to further boost wholesale rates. “
