KiwiSaver Simplicity’s default provider has reduced its variable rate mortgage to 1.9%, one of the lowest rates available on the market.
Friday, June 18, 2021, 11:03 a.m.
The new rate is heavily priced, although ASB’s Back My Build variable rate loan is available at 1.79%.
Most bank floating rates remain above 3.4%, despite a record official cash rate and favorable monetary policy.
Heartland offers a 1.95% variable online home loan with the second cheapest Resimac at 3.39%.
The cheapest fixed mortgage is still Heartland’s 1-year online home loan at 1.85%.
Simplicity, a nonprofit provider of KiwiSaver, recently became one of the government default programs.
Its variable rate mortgages are offered to members only, for first homes. Customers can apply and receive pre-approvals online.
Simplicity said its 35 basis point cut was the fifth rate cut since launching its home loan offering in 2019.
“Someone has to keep the banks honest, and the current interest rate climate is pushing mortgage rates down,” said Sam Stubbs, co-founder of Simplicity.
“The major banks currently charge 3.40% to 4.59% for a variable rate mortgage. At these rates, banks don’t get robbed, they steal.
“And the banks are offering cheaper fixed rates because they want borrowers to renegotiate their mortgage every year or every two years. This allows them to sell more high-cost products like credit cards and insurance, ”he added.
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