7 June 2019
Heritage Bank will cut its variable home loan rates by 0.20%, following the Reserve Bank’s decision this week to reduce the official cash rate.
Customers on a Discount Variable home loan rate of 3.77% will have their rate cut to just 3.57%.
CEO Peter Lock said Heritage’s rates remained among the sharpest available in the market place.
He said Heritage had considered the best interests of all its customers, investors as well as borrowers, in coming to the decision.
“It’s important to recognise that reductions in interest rates also impact people like self-funded retirees, who rely on interest income from deposits they have with us to fund their living costs,” Mr Lock said
“Lower interest rates means lower income for them, and that can have a significant impact on their lifestyles.
“We have to think about both depositors and borrowers when we make these decisions.
“A 0.20% reduction in variable rates means our rates remain highly competitive, and strikes the right balance for us and our customers.”
Mr Lock said Heritage’s customer-owned status meant it did not have the deep pockets of the big banks.
“We don’t set out to make massive profits, so our margins are lower than the big banks. In addition the big banks have a funding cost advantage that smaller customer-owned banks don’t enjoy. We continue to actively work with the Government to address this imbalance.
“Despite the imbalance we still have home loan interest rates that as a whole remain lower than those offered by the big banks.”
Mr Lock added that a number of other banks had increased their home loan rates significantly earlier this year, despite the RBA cash rate not changing.
“We always make decisions to balance the best interests of all our customers at heart, not to maximise profit, so our rates stayed lower through that period.”
The interest rate reduction will be effective from 21 June.