The latest round of mortgage wars is heating up, with three more banks cutting interest rates in the fight to attract customers.
A week after the Herald reported that BNZ and Kiwibank had trimmed some fixed-term rates, ASB, ANZ and the Co-operative Bank have now announced cuts.
Industry experts expect more to follow suit in the battle for the lucrative home loan market, with mortgage holders set to save thousands of dollars in repayments and potentially shave years off their loans.
But the banking sector is also being accused of price gouging to generate extra profit, with claims banks are unfairly levying thousands of dollars in additional charges on some low-equity borrowers then blaming the fees on the Reserve Bank's loan to value ratio (LVR) limits.
This month, Kiwibank cut its two-year rate by 20 basis points to 5.55 per cent for borrowers with at least a 20 per cent deposit.
Days later, BNZ said it was cutting its "special" three-year rate to 5.59 per cent for home buyers with at least 20 per cent equity -- down from the bank's previous 5.99 per cent rate.
Last week ASB reduced its three-year special rate from 5.85 per cent to 5.59 per cent. And yesterday it emerged ANZ had moved to match Kiwibank's two-year special, down 20 basis points, with ASB following suit last night, effective from today.
Meanwhile, the Co-operative Bank has cut its standard rates across the board, but low-equity borrowers will still incur a "premium" charge.
Many banks are also offering cash sweeteners in a bid to lure first home buyers or customers from rivals while the official cash rate is low.
Mortgage Link West broker Stuart Wills said the home loan market was "crazy" with banks cutting rates.
But he accused banks of levying unfair charges on customers refinancing, then blaming the LVR rules.
Bankers Association chief executive Kirk Hope said under the LVR limits, existing customers' refinancing was still classed as new lending.
By Lane Nichols of the New Zealand Herald
