The 100% New Zealand owned Kiwibank has scored a five star rating across both residential and investor sectors, in both the fixed and floating rate categories – a great achievement. We caught up with Kiwibank’s Product Manager Home Loans, Leighton Roberts, for a quick Q&A on a competition and customer preferences.
Q: Kiwibank has scored five stars for outstanding value in both the fixed and floating sectors. When it comes to new customer loans, has there been any noticeable shift in customer preference between fixed or floating rates? Why?
A: There has been a significant move to fixed rates from variable rates over the last 12 months or so – the primary reason being price. There are also still many customers who choose to stick with variable rates and save money by paying their loans off faster.
Q: The fixed-rate home loan market in particular seems to be very competitive at the moment – why is there such competition for fixed terms at the moment?
A: The start of the year is always a competitive time in the home loan market. In addition, most people now expect that interest rates in New Zealand will remain steady for some time which is allowing more attractive pricing in fixed rates.
Q: When it comes to fixed-rate terms, what terms are customers typically choosing, or is it spread fairly evenly?
A: The 2 and 3 year terms tend to be New Zealanders favourites. But the competition is extending right out to the 5 year terms at the moment and there does seem to be a more even spread than we have seen previously.
Q: When deciding between a fixed of floating rates, what are some key considerations for customers?
A: Customers should consider their plans over the next few years and how vulnerable they would be to a change in interest rates. Customers moving on to fixed rates are often looking for certainty in their repayments and protecting themselves from an increase in interest rates. Customers who are a bit more uncertain or think they may be able to pay the loan off faster than their term might prefer to stay on a variable rate.
Read Canstar’s Home Loans Star Ratings report for details of other five star home loan products providers.