Kiwibank ramps up pressure on rivals
Kiwibank chief executive Steve Jurkovich says the bank's home lending enquiries have risen by 30% since it cut floating rates, and has called on rivals to follow suit.
Friday, June 26th 2020, 6:55AM
Earlier this month, Kiwibank slashed floating rates by 1% in what it called a "market reset". The bank's floating rate, at 3.4%, is 104 basis points lower than the cheapest variable rate at a big four lender.
The Kiwibank boss said enquiries have risen across the board since it cut loan rates.
He told TMM Online: "Following the move, we have received high volumes of enquiries from both new and existing customers wanting to talk about their home loan options with Kiwibank. Retail home loan enquires are up 30% and SME enquiries are up 20%."
With a considerable price gap between the state-backed bank and its rivals, Jurkovich has ramped up pressure on larger banks to cut rates for New Zealanders.
"This is about what Kiwibank can do to support its customers, but I do wonder why there’s been no move from the other banks on this," he said. "In fact, if all banks were to reduce their floating home loan interest rates by 1%, it would save New Zealanders around $400 million per year in interest, which would make a huge difference to people’s lives. [An extra] $100 a fortnight back in the pocket of kiwis makes them better off."
Since the Covid-19 pandemic, advisers report Kiwibank is one of the few banks supporting investors at 80% LVR. Despite the end of LVR restrictions, most banks are sticking to tight internal limits.
Jurkovich reiterated the bank's support for investors up to 80%.
"Whether they are investors, first time homeowners or looking at a change we are always wanting to assist New Zealanders achieve their home ownership aspirations."
While Kiwibank only works with a handful of advisers, it is looking to increase its broker distribution. Jurkovich has told TMM the bank is in the process of setting up a fully-fledged broker unit, and expects it to be up and running later this year.
A spokeswoman added: "We are underway with accrediting additional advisers to work with Kiwibank. This is on a niche and selected basis only."
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