14 Aug 2010

More mortgage rate cuts by trading banks

6:19 am on 14 August 2010

ANZ, National and Westpac have cut their two year mortgage rates for the second time in a week.

ASB made the first round of fixed rate cuts last week. All the main banks followed earlier this week and floating rates were raised at the same time.

ANZ, National and Westpac cut two year fixed rates by another tenth of a percentage point late on Friday in an effort to close the gap with Kiwibank.

The state-owned bank's two year fixed rate of 6.69% is still the cheapest in the market.

Downward pressure on fixed rates continued to mount this week with a slew of bad economic news.

Radio New Zealand's economics correspondent says there is a growing belief that the Official Cash Rate will not rise as far or as fast as previously thought.

Offshore borrowing costs for banks fell in response to gloomy economic news in the United States and China.

National Australia Bank chief executive Ralph Norris this week criticised Kiwibank.

He said it was not generating enough profits to get the capital it needs to grow.

Kiwibank currently has a business case before the Government for extra capital to support future growth.

NAB is the owner of the BNZ.