Banks cut home loan rates

ASB Bank has joined Westpac and Kiwibank in cutting its home loan rates in the wake of the Reserve Bank's surprise half percentage cut to the official cash rate today.

ASB has dropped its floating home lending interest rate by 0.50 percent to 10.25 percent.

The bank has also dropped its fixed home lending rates, the 12 month rate now sitting at 8.95 percent and the 2 year rate at 8.90 percent.

ASB said the new home lending rates would take place immediately for new borrowers, and the floating rate change would be effective from 6 October 2008 for existing borrowers.

Meanwhile, Westpac said it would drop its variable mortgage rate, from Monday, by half a percent to 10.45 percent per annum. The cut would be for new customers and existing ones following a rate change notification process.

Westpac’s general manager for product management, David Cunningham, said the official cash rate cut had a direct impact on short-term funding for banks, which could be passed on to customers.

“There will be other changes to various deposit rates, while fixed mortgage rates are currently unchanged but will continue to be reviewed,” Cunningham said.

Earlier Kiwibank said it was dropping half a percent off its variable rate and 0.36 percent from its two-year fixed rate.

"We appear to have passed the peak of very high interest rates and we now have the opportunity to pass on some genuine savings to home owners," Kiwibank chief executive Sam Knowles said.

He said Kiwibank had taken a "very aggressive" position in the two-year fixed market with a 8.49 percent per annum rate and a 8.39 percent annual three-year rate.

"These rates apply for those with 20 percent or more equity in their property," Knowles said.

Kiwibank's variable rate is now 9.70 percent per annum.

Knowles said forecasting rate movements was difficult, but he expected Kiwibank would at least be able to hold the new rates as well as look to cut rates further when the opportunity arose.

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