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Co-operative Bank has teamed up with rival colleague Heartland to cut rates on its home loans far below those of the Big Four banks.
Heartland had lowered its owner-occupant rates for one-year fixed home loans for home equity borrowers from at least 20% to 1.99%, and its two-year fixed rate to 2.35%.
Both were lower than any of the big four banks.
The cooperative bank is offering a 2.09 percent rate at a fixed annual rate to first-time home buyers.
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It also lowered its six-month fixed rate for first-time home buyers to 2.29 percent.
Martin De Ruyter / Things
Home loans are booming as house prices continue to rise. Heartland and Co-operative Bank are cutting interest rates on big banks in a bid to gain market share.
None of the big four Australian-owned banks is offering a six-month fixed rate below 3 percent, although HSBC and TSB are.
Co-operative Bank CEO David Cunningham said Interest.co.nz that the bank had used the Reserve Bank’s Financing for Loans program.
The program provided cheap financing for banks and was designed to back loans in an attempt to help the economy weather the economic storm caused by the Covid-19 pandemic.
In October, Heartland Bank cut rates on home loans below 2%, a record low.
Heartland Group CEO Jeff Greenslade said the fees highlighted the benefit of its digitization strategy and the funding flexibility its group structure provided.
Banks had invested heavily in moving their loan services online, which also sped up the approval process and cut costs significantly, he said.
Heartland’s home loan rate cut came when disgruntled bank staff went on strike demanding wage increases.
Mortgage adviser Karen Tatterson said that challenging banks, including SBS and TSB, were options that borrowers interested in negotiating with New Zealand-owned banks could use.
Peter Meecham / Things
Mortgage counselor Karen Tatterson says challenging banks offer a good option for borrowers.
TSB had a price match offer that would at least match the best offer of any Australian-owned bank, he said.
“Smaller banks are a very good option in some cases,” Tatterson said.
But the big Australian-owned banks still dominate the loan market, he said.
“The volumes (of the challenging banks) are small compared to the big banks,” he said.
Big banks also have a KiwiSaver challenger with Simplicity that offers 2.5% floating rate home loans to their first-time homebuyer members.
Only Heartland among banks has a 2.5% floating rate home loan to match Simplicity’s offering.
Co-operative Bank’s floating rate is 4.4 percent.
