Kiwibank is offering a limited time six-month home loan rate of 4.99%.
The six-month special rate requires a property owner to a have a minimum of 30% equity in the property, otherwise the bank's standard six-month rate of 5.65% applies.
Kiwibank chief executive Paul Brock said it is by far the lowest rate ever offered by the bank and significantly under cuts the other main banks.
"We've seized an opportunity to offer what we believe is a startlingly low home loan interest rate. We're looking to grow our mortgage portfolio and to pass through savings to customers," Brock said.
We have sorted the rates table on six month terms here. It shows Brock is correct. The rate is "startlingly low".
Kiwibank can make such a move as the banks are considered to have pretty fat margins on their lending rates at the moment.
We are told Kiwibank isn't using this offer as a loss leader, however it will be on tighter margins.
It also thinks that many borrowers will move from floating rates at the big banks to this six month rate and park their loan with Kiwibank.
This is all part of its strategy to grow its market share but also to get customers to shift from other banks.
