KiwiSaver Simplicity’s default provider cut its first floating mortgage rate to 1.90% per annum today, a record high in New Zealand.
The change, from 2.25% to 1.90%, marks the association’s fifth rate cut since the launch of its first mortgage offer at the end of 2019.
âSomeone has to keep the banks honest, and the current interest rate climate favors lower mortgage rates,â said Sam Stubbs, co-founder of Simplicity.
âThe major banks currently charge 3.40% to 4.59% for a variable rate mortgage. At these rates, the banks are not robbed, they are robbing, âsays Stubbs.
âThe floating rates that are so expensive force borrowers to borrow on a fixed term, with penalties and break-up fees,â he said.
âAnd 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, âhe said.
The first Simplicity home loans have a term of 30 years and have a variable interest rate. This means that all or part of the principal can be repaid at any time, without penalty or breakage fees.
It also offers pre-approvals and mortgage applications online, significantly reducing the time it takes to get a mortgage.
Simplicity was formed four years ago. The association manages more than $ 3 billion in funds for its 64,000+ members and donates 15% of the costs to charity. The total charitable donation now stands at over $ 2 million.
Simplicity won Consumer NZ’s People’s Choice award for KiwiSaver in 2020. The nonprofit has also won Canstar’s Customer Satisfaction Award for the past two years. He recently received the Morningstar Fund Manager of the Year: KiwiSaver Award for 2021.
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