Bank mortgage war increases pressure on Bollard

Thursday 28 October 2004

Reserve Bank governor Alan Bollard may be forced to raise interest rates higher this month and again in December, in part because of a price war among banks over two-year fixed lending rates.

By The Landlord

National Bank joined the fray yesterday, trimming its two-year rate from 7.5 per cent to 7.3 per cent and argued that its total mortgage package may be better than market leader Bank of New Zealand. BNZ has undercut the other big banks with a two-year rate of 7.15 per cent.

National Bank said it would pay the first year's premium on house and contents insurance for new mortgages. That was worth about $800 a year, more than the saving on the BNZ's 7.15 per cent rate.

ASB is offering 7.2 per cent and ANZ 7.35 per cent, with bank customers saying that some BNZ rivals are willing to match the 7.15 per cent rate on bigger loans, after negotiation.

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