Small NZ Bank Offers Lowest One-Year Mortgage Rate, But Optimal Conditions Apply

Date Published: 21 May 2024

Key Facts

• SBS Bank has cut its one-year interest rate for first-time home buyers to 6.14%, which is at least 1% lower than other banks’ current rates.
• This rate is part of the FirstHome Combo package, offered exclusively to first-time home buyers.
• Eligibility for this rate includes first-time buyers who have a 20% deposit or those buying through Kainga Ora’s First Home Loan scheme, which requires only a 5% deposit.
• The maximum cashback on offer is $4000 and includes the borrower moving their KiwiSaver.
• Other banks like Westpac and Kiwibank are offering special rates for first-time buyers under the scheme, still higher than SBS Bank’s offer.
• ASB and BNZ have recently trimmed their interest rates, but major cuts are not expected until at least November this year.
• The Official Cash Rate (OCR) is expected to fall in early 2025.

Article Summary

SBS Bank, one of New Zealand’s smaller banks, has recently attracted attention by reducing its one-year interest rate for first-time home buyers to 6.14%, a rate that is significantly lower than what is currently offered by other banks. This interest rate is offered as part of its FirstHome Combo package. According to an SBS Bank spokesperson, this rate reduction mirrors the bank’s commitment to helping Kiwis find a home.

This offer, however, comes with conditions. Eligibility is specifically for first-time home buyers who have either a 20% deposit or those purchasing through Kainga Ora’s First Home Loan scheme, which necessitates only a 5% deposit. Moreover, the maximum cashback that’s on offer is $4000 and it mandates borrowers to move their KiwiSaver. Experts caution that while this might seem attractive, the impact in the long run may not be as beneficial as it seems, as the competitiveness of future rates is uncertain.

While other banks are also offering special rates under similar schemes, these are still higher than SBS Bank’s offer. Some banks, including ASB and BNZ, have recently made minor adjustments to their interest rates, but significant cuts are not predicted until at least November this year. Meanwhile, the Official Cash Rate (OCR) is likely to start declining in early 2025.

In conclusion, while SBS Bank’s rate cut may seem appealing at first glance, it is crucial for potential borrowers to consider the long-term implications and eligibility criteria before making a decision. It’s also important to be aware that although NZ banks are offering competitive rates, substantial interest rate cuts across the board are not expected until later this year.

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