Bank of New Zealand Drops Rates

27 May 2005

Media release – for immediate release

Bank of New Zealand Drops Rates, Launches Third Unbeatable Home Loan Campaign And Extends Unbeatable Promise To Three Year Fixed-Rate Term

Bank of New Zealand resumes its Unbeatable home loan promise from Monday, and this time the Unbeatable promise is extended to the three year fixed-rate term. That means that for the first time since Bank of New Zealand introduced Unbeatable, in late 2004, customers will be able to enjoy the benefits of the Unbeatable promise on a longer term loan.

The Unbeatable campaign opens with a rate reduction by Bank of New Zealand. The Bank has cut the two year fixed-rate on Classic Home Loan from 7.60% per annum to 7.55% per annum. The Classic Home Loan three year fixed-rate is 7.55%, which is 0.25% lower than Bank of New Zealand’s standard three year rate.

These rates are available from Monday, 30 May 2005. The rates are available only on Bank of New Zealand’s Classic Home Loan.

Further, from Monday Bank of New Zealand is making its Unbeatable promise again: on the Classic Home Loan, Bank of New Zealand promises to beat any currently advertised two or three year fixed-rates offered by its major competitors (Westpac, ANZ, National Bank, and ASB (excluding BankDirect)). To take up Bank of New Zealand’s promise, loans must be drawn down by 15 July 2005.

This is Bank of New Zealand’s third Unbeatable campaign, the first one having ignited the mortgage rate war of late 2004. The second campaign ran between 26 February and 29 April.

Bank of New Zealand’s General Manager of Marketing, Distribution, and Strategy, Andrew Whitechurch, says the campaigns have been successful, both from the point of view of the Bank and for home loan customers.

“Shifts in the interest rate cycle have meant more customers are starting to fix for three years,” Mr Whitechurch said. “Therefore, to ensure that customers continue to get a great deal at the term that they choose, we’ve extended the Unbeatable promise to the three year term in this campaign.

“From the point of view of customers, they are now able to get a home loan at low interest rates over either two or three year terms, both of which are very popular. And that’s at a time when interest rates are generally rising.

“From the point of view of Bank of New Zealand, our share of the mortgage market is growing steadily, which makes good business sense for us.

Mr Whitechurch said industry commentators should note two important points regarding Bank of New Zealand’s home loan strategy.

“While the Unbeatable campaigns are the most obvious example of the strategy, they simply reflect our on-going approach in the two year fixed-rate market, where Bank of New Zealand has had the lowest two year fixed-rates among the major banks for almost all of the last 18 months. In other words, we are rarely beaten on that rate at anytime.

“The Unbeatable campaigns are not random activities – they are part of an on-going strategy by Bank of New Zealand to prove to consumers that Bank of New Zealand is always very competitive on home loan rates, and to build our share of the home loan market over the long-term.

“The other important point is that we can afford these campaigns because we sell all of our home loans directly. We do not incur the commissions or support costs associated with selling through mortgage brokers.

“That gives us a substantial cost advantage over our major competitors, an advantage that we pass on to our customers.”

Ends

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