Mortgage rates slide despite Bollard move

Monday 1 November 2004

Reserve Bank governor Alan Bollard is kicking open the door to an even tougher bank price war on fixed-rate home loans, with two-year rates heading down to less than 7 per cent.

By The Landlord

ANZ Bank fired the latest shot late yesterday, trimming its two-year fixed rates from 7.35 per cent to 7.2 per cent in an effort to grab customers.

One market watcher said yesterday that under 7 per cent looked "a distinct possibility" soon and that the price war could also widen to other rates.

ANZ cut its fixed rate despite Dr Bollard's decision to bump up the official cash rate for the sixth time this year to 6.5 per cent.

That may see banks tweak their floating mortgage rates slightly higher, but few borrowers are taking on floating rates at 8.5 per cent.

Some commentators say about 90 per cent of recent loans are for fixed terms, most for two years, and rates have fallen from as high as 7.75 per cent earlier this month to as low as 7.15 per cent.

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