Simplicity launches 2.25% floating rate

The Kiwisaver provider had previously offered a floating rate mortgage at 2.5%.

The new rate is the cheapest floating rate loan in the market by some distance. Resimac, the next cheapest lender, offers a variable rate of 3.39%. 

However, the rate is only available to Simplicity KiwiSaver members, with loans allocated by a ballot system. 

Sam Stubbs, managing director at Simplicity, once again called for banks to follow suit and slash rates, amid unprecedented support from the Reserve Bank to lower retail interest rates. 

“Mortgages appear to be going in one direction, down,” Stubbs said. “And there's still room for them to go lower, especially if the Reserve Bank take interest rates to zero, or below zero.”

“If Simplicity can lend at 2.25%, the banks, with their massive scale, should be able to lend at even lower rates,” he said. “But they don’t, because they're hard wired to squeeze every cent out of Kiwis, even with Covid-19 making it tough for hard working families.”

Stubbs criticised the banks' mortgage deferral scheme, pointing out lenders will continue to earn interest at higher rates for longer.

"Holiday is a nice word, but in this case a very expensive one,” he said.

"For example, for a family with a 20 year, $500,000 mortgage paying 4% interest, it means another $15,000 in interest payments over the life of the loan. That’s $15,000 more for the bank, $15,000 less for the homeowner.

“That might fund a holiday for bank executives, but for the rest of us it means more interest to pay."