PHOTO: Westpac. AFP VIA GETTY IMAGES
A mortgage war is brewing in New Zealand, with Westpac firing the first shot—offering a shockingly low 4.99% three-year fixed home loan rate. This is the first time a major bank has dropped below 5% in this cycle, putting pressure on other lenders to follow suit.
Westpac’s Surprise Move – Can Other Banks Keep Up?
Westpac’s decision has sent shockwaves through the mortgage market, with industry experts predicting that other banks may be forced to match the offer to retain customers. Currently, most major banks are offering three-year fixed rates at 5.59%, making Westpac’s move a significant price cut.
Mortgage experts say the offer isn’t sustainable long-term, but it could be a strategic move to attract new borrowers and grab market share.
What This Means for Borrowers
✅ Massive Savings: A drop from 6.25% to 4.99% means homeowners could save thousands in interest costs.
✅ More Competition: Other banks may secretly match the rate if you ask, so it pays to negotiate.
✅ Falling Term Deposit Rates: While great for borrowers, savers could suffer, with term deposit rates expected to drop below 4% soon.
Is This the Beginning of a Mortgage Rate War?
Mortgage market insiders believe this could be the first step toward lower long-term rates, as banks compete for business. However, Infometrics economist Gareth Kiernan warns that the Westpac rate isn’t likely to last and could be a temporary marketing tactic.
Meanwhile, Squirrel chief executive David Cunningham says this may be the start of a long-term trend, pushing mortgage rates back to historically normal levels after years of inflated margins.
How to Take Advantage of the Mortgage War
💰 Ask Your Bank to Match It – Even if they don’t advertise it, lenders may offer the same 4.99% rate “below the line” to keep you.
💰 Refinance Now – If your mortgage is up for renewal, this could be the best time to lock in a lower rate before they disappear.
💰 Check Term Deposit Rates – If you’re a saver, consider locking in rates before they drop further.
What Happens Next?
With $370 billion in home loans in New Zealand, a 1.25% drop in mortgage rates could save homeowners $4 billion per year. If other banks respond aggressively, we could see even lower rates in the coming months.