Heartland declares lowest floating home loan rate in New Zealand

  • November 09, 2020 10:03 PM NZDT
  • Team Kalkine
Heartland declares lowest floating home loan rate in New Zealand


  • Heartland Bank has slashed its floating home loan rate by 45bps to 2.5% per annum, the lowest floating rate provided by a bank in NZ.
  • In October, Heartland Bank had announced a 1-year fixed home loan rate at 1.99%, launching the lowest mortgage rate in NZ history and the low rate was made possible due to the bank’s digital strategy.
  • Banks have been told to be prepared with their systems to cope up with negative rates from 1 December.

Heartland Bank Limited (NZX:HBL) has cut down its floating home loan rate by 45 bps to 2.5%, lowest floating mortgage rate of any NZ bank at present.

Since banks want the certainty of keeping creditors locked in for a certain amount of time, floating rates are usually much higher than fixed-term rates.

The bank’s offer of a floating rate below 3% is substantially lower than its competitor banks. ANZ, ASB, Westpac and BNZ have floating rates in the range of 4.44% to 4.59%.

The home loans of the bank are a digital offering that the application can be only online and directly with the Heartland Bank. Loans cannot be sourced through brokers unless any direct payment is made to the broker.

Jeff Greenslade CEO of Heartland Bank stated that consumers are searching for significantly cheaper floating rate alternatives than are currently open.

DO READ: RBNZ likely to encourage more lending through its FLP tool

Consumers can save their time and money through the digitalisation of the application process with the bank also offering products through its low-cost channel, as per Mr Greenslade.

Customers must refinance or buy a standalone house on a single portion in a large New Zealand centre, have a deposit or collateral of at least 20% and expect to remain in the home, to be considered for Heartland Home Loans.

For anyone who refinances their home loan with the bank and takes out a loan on the floating rate for least 12 months, the bank is now promising a $750 cashback.

Heartland Bank launched the lowest mortgage rate in October

Heartland Bank launched the lowest mortgage rate in NZ history, announcing a 1-year fixed loan rate of 1.99%. Further, the bank is also offering a fixed 2-year rate of 2.35% and a 3-year rate of 2.45%.

The low rate of the bank was made possible by its digitalisation strategy, as per Mr Greenslade. He stated that digitalisation implies the low cost of onboarding that can be passed to borrowers.

It also implies speed as answers can be given in minutes so that customers do not have to go through the lengthy processes at mainstream banks.

ALSO READ: Heartland Bank Creates History by launching NZ's lowest Home Loan rate

Banks have been told to be prepared with their systems to handle the negative rates.

RBNZ is due to give its monetary policy review on 11 November, with expectations that OCR would be kept on hold at 0.25% but restated its desire to take OCR to below 0 in future.


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