Banks slash floating rates after 50bp OCR cut

ASB was the first of the major banks to react, immediately dropping its floating home loan rate by 50 points to 7.89%, while BNZ soon cut its variable rate by 50 points to 7.94%.

The Real Estate Institute was also quick to react, saying that the OCR cut “will not only bring relief for borrowers but also reinforce the optimism in market sentiment” that has shown up recently in increasing activity, especially at open homes.

Economists had predicted a 50 point OCR cut and markets had already priced in a cut of that magnitude ahead of the statement.

In the first few minutes after the announcement, the New Zealand dollar fell as low as 60.98 US cents compared with 61.35c immediately before while two-year swap rates fell seven points to 3.64%.