The Co-operative Bank says it has delivered a full pass-through of Official Cash Rate reductions to its floating home loan customers, positioning itself as the only New Zealand bank to provide the complete benefit of the current monetary policy easing cycle.
Since the Reserve Bank began cutting the OCR 15 months ago, the benchmark rate has fallen from 5.5% to 2.5%, a reduction of 3%. Across the same period, The Co-operative Bank has lowered its floating home loan rate by 3.1%, taking it to 5.3%. The bank says this is the lowest variable rate available to all customers in the New Zealand mortgage market.
Mark Wilkshire, chief executive of The Co-operative Bank, said the bank’s approach reflects its commitment to fairness and customer value. “With the bank’s floating volumes almost doubling in the last year, we’re pleased to offer both great value and flexibility through our market leading rate,” he said. “As a customer-owned bank, The Co-operative Bank puts customers first in pricing decisions. We estimate that New Zealanders could be paying more than $100m per annum extra due to the amount of floating rate cuts held back by the Big Four Australian banks.”
Wilkshire said the bank was encouraging borrowers to reassess their options given the shifting rate environment. “With another OCR review due at the end of November, it will be interesting to see how other banks respond in what remains a delicately poised economic recovery,” he said. Floating rates continue to provide flexibility for customers and the potential for lower interest costs should mortgage rates fall further.
Data released by the bank shows it has exceeded the OCR reduction by 0.10%, while the major banks have passed through between 2.55% and 2.75% over the same period.