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Friday, December 19, 2008

Banks use RBNZ cut to gouge out bigger margins

The day the RBNZ dramatically dropped it's rate by 1.5% (4 December when the OCR went from 6.5% to 5%) I posted the retail bank rates. The Governor encouraged the banks to pass on the lower rates to their customers instead of boosting their margins. So what did they do? Most of them cut their term deposit rates by 0.5-0.75%, but only lowered their mortgage rates by less than 0.5%. More money for them - less money for their "customers".

These are the rates at 4 December - before they responded to the cut - and in bold the rates today:

Kiwibank (Govt.) -
Term: 120 days @ 6.5% 5.85%
Home: floating: 7.45%, fixed: 1y 6.49%, 6.49%5yr 7.7%
ASB -
Term: 150 days @ 6.5% 5.75%
Home: floating @ 8.7%, fixed: 1y 7.4% 6.95%, 5yr 8.25%
BNZ -
Term: 60 days @ 6.25% 5.75%
Home: floating: 8.29%-8.99%, fixed: 1y 7.29% 6.99%, 5yr 7.85%
ANZ -
Term: 120days @ 6.5% 5.2%
Home: floating: 8.7%, fixed: 1y 7.3% 6.99%, 5y 8.2%
National (ANZ) -
Term: 100days @ 6.5% 5.75%
Home: floating: 8.7%, fixed: 1y 7.3% 6.99%, 5y 8.2%
Westpac -
Term: 95 days @ 6.5% 6.0%
Home: floating: 8.7%, fixed: 1y 7.3% 6.8%, 5y 7.85%
TSB -
Term: 120 days @ 6.75% 6.0%
Home: floating: 8.7%, fixed: 1y 7.29% 6.75%, 4y 7.85%
SBS -
Term: 6.75% 5.6%
Home: floating: 9.15%, fixed: 1y 7.3% 6.99%

Margin between term deposit rate and 1 year fixed home loan rate:

BNZ 1.04% 1.24%
ASB 0.9% 1.2%
Westpac 0.8% 0.8%
National 0.8% 1.24%
ANZ 0.8% 1.79%
SBS 0.55% 1.39%
TSB 0.54% 0.75%
Kiwibank -0.01% 0.64%

So, every bank except Westpac has increased their gross margins - exactly what the Reserve Bank Governor knew would happen - that's why he was particular about publicly warning them not to. And a fortnight is long enough to have passed the bank's lowered costs of wholesale borrowing on. But that's the market - a cartel dominated by Aussie corporates.

[UPDATE 2pm: And this from RNZ:Some of the staff required will be filled by the New Zealanders laid off in London (and elsewhere) returning home. I met one such returnee last week - coincidentally they'll be working for ANZ. But in terms of needing to go overseas for staff in this industry at this time it does seem pointless.]

2 Comments:

At 19/12/08 1:48 pm, Blogger Jon said...

But at least the Kiwi owned banks have the lowest rates....

 
At 22/12/08 9:04 pm, Anonymous Anonymous said...

I heard the BNZ apologist telling us how bad the Kiwibank comparative advertising was. I thought the BNZ man should just piss off back to Redfern, Sydney and find some Abboes to beat up.
Those aussie banks make me nauseous.
Steve L.

 

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