Heritage Bank announced today it will reduce its Standard Variable home loan interest rate by 0.10%, following the Reserve Bank’s recent decision to cut the official cash rate.
Heritage’s Standard Variable rate will drop to 5.04%, well below all of the big four banks and still among the sharpest in the market. Other variable home loan rates will also drop by 0.10%.
CEO Peter Lock said the decision represented a balance between the interests of both borrowers and savers, as well as maintaining the long term sustainability of Heritage.
Mr Lock said it would allow Heritage to maintain competitive rates on its term deposit and investment products.
“We are always mindful that home loan borrowers are only part of our customer base. We also have to consider the impacts on people who rely on the savings they invest at Heritage to meet their living costs,” he said
“Cutting home loan rates also means that savers will earn less interest as well. With rates already at historic lows, that can have a big impact on people like pensioners and self-funded retirees.
“Consequently, we have tempered many of our deposit rate decreases and introduced a 10- month term deposit rate at a competitive 3.00%.
“It’s also important to remember that our funding costs do not automatically drop just because the RBA cuts the cash rate.
“In fact, the RBA rate is only one of many factors that influence our costs. As a result, passing on interest rate cuts does have an impact on our income.
“And while we’re not out to maximise profits, we do have to operate at a sustainable income level to make sure we protect our long-term strength and viability for our members.
“Our decision is a balance that represents the best interests of Heritage and our customers overall.”
The rate change will come into effect from 24 August.