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All major banks cut interest rates after official cash rate drops

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All the major banks have moved to cut interest rates, after the Reserve Bank delivered a 50 basis point cut to the official cash rate.

But one economist has warned the bank may be about to “overshoot” with its rate reductions, and cut too far.

Here is how the banks responded on Wednesday.

ANZ

ANZ said it would cut its floating home loan rate to 6.89 percent from Tuesday for new loans and March 4 for existing borrowing.

It would also cut all of its fixed rates by between 10 basis points for a six-month fix through to 45 basis points for a two-year term.

That takes its one-year special to 5.29 percent and its two-year rate to 4.99 percent.

Managing director for personal banking Grant Knuckey said about 86 percent of the bank’s customers with a fixed rate higher than 6 percent would roll on to lower rates by the end of this year.

“Borrowers could potentially see 100-basis points or more coming off their home loan interest rate when they refix,” he said.

Westpac

Westpac had cut its one-year rate to 5.49 percent, a drop of five basis points, its four-year rate to 5.99 percent, a drop of 10 basis points, and its five-year rate to 5.99 percent, a drop of 20 basis points.

But it was bringing its three-year special of 4.99 percent to an end.

“We’re seeing growing confidence among households and businesses about the year ahead, and today’s rate cut will give homeowners a further boost and help put more money in their back pockets,” said general manager of product, Sarah Hearn.

Kiwibank

Kiwibank said it was passing on the full OCR cut to its floating home loan rates from Monday for new lending and March 10 for existing lending.

That takes its variable home loan rate to 6.75 percent.

ASB

ASB also passed on the full reduction to floating borrowing, taking its variable housing rate to 6,89 percent.

Executive general manager, personal banking, Adam Boyd, said the bank had reduced its variable rates by nearly 2 percent in the past six months.

ASB would also reduce some of its savings rates.

BNZ

BNZ was reducing its floating rates to either 6.94 percent for the standard variable home loan rate or 7.04 percent for TotalMoney, Mortgage One and Rapid Repay.

Is Reserve Bank going too far?

Chief forecaster at Infometrics, Gareth Kiernan, said Reserve Bank seemed to be downplaying the increased risk of inflation that had become evident in recent weeks and was pushing towards more OCR cuts rather than fewer.

“It has also mostly ignored signs that the economy is beginning to improve. I would expect financial markets to react to the statement by boosting their expectations of further OCR cuts – the bottom of the cycle now looks like being 3 percent and possibly even lower, rather than the 3 percent to 3.25 percent that markets had previously been pricing in.

“As a result, I’d expect to see some more downward pressure on fixed mortgage rates up to two years, with further falls of up to 25 points possible in the next couple of weeks.

“The bank is starting to run the risk of overshooting again on the way down – as it’s done at both the trough and peak of the cycle in the last four or five years.”

But chief economist at Kiwibank, Jarrod Kerr, said more cuts were needed.

Kiwibank chief economist Jarrod Kerr.

Kiwibank chief economist Jarrod Kerr. Photo: Supplied / Gino Demeer

“We must point out that a 3.75 percent cash rate remains well above estimates of neutral – which are close to 3 percent.

“So interest rates remain at levels that restrain demand, and after a severe recession, it’s hard to justify. We have rising unemployment and inflation rangebound near target. Job done. Release the break and put it in neutral. If anything, the Reserve Bank may need to stimulate, by putting the economy in drive, tapping the accelerator, and cutting below 3 percent.”

Corelogic chief property economist Kelvin Davidson warned retail rates might not have as far to fall as some people might expect.

“For the property market and mortgage borrowers, then, the key message is that any further interest rate cuts are set to be smaller or slower than those seen to date – especially since banks were already cutting in advance of today’s decision.

Kelvin Davidson

Corelogic chief property economist Kelvin Davidson. Photo: SUPPLIED

“In addition, continued global uncertainty suggests that the risks to the medium-term inflation outlook are more to the upside than downside. In this environment, after a stampede towards floating and short-term fixed rates lately, it’s possible that some borrowers’ focus will shift back towards longer-term fixed rates again at some stage soon.”

The Finance and Mortgage Advisers Association of New Zealand said banks should all pass on the full reduction to new and existing borrowers quickly.

“Our message to borrowers who do not see a reduction in their repayments is to contact your lender and ask why. If you don’t get satisfaction see your mortgage adviser as the market is becoming more competitive and advisers can assist you to refinance if necessary,” country manager Leigh Hodgetts said.

“The general feeling across New Zealand is that there will be further rate cuts during 2025, and we are already seeing competition heating up between the banks.

“Some lenders are already factoring this into their rates, with a few headline rates coming out from Westpac at 4.99 per cent for a three-year fixed rate, and TSB moving yesterday on a two year fixed rate at 5.29 per cent.”

~RNZ

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Business

Jetstar to charge new fees for using overhead lockers for carry-on

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Jetstar will soon charge customers money for using overhead lockers on its aircraft, with prices starting from $23.

The Qantas-owned budget carrier said it was part of a change in its carry-on model, which included removing its 7-kilogram carry-on weight limit.

It would instead move to a size-based carry-on baggage model and a fee to use the overhead bins.

From 2 February 2027, all Jetstar bookings would include one underseat bag such as a backpack, handbag or laptop.

Those who needed more carry-on baggage would have to pre-purchase what the airline called Priority Carry-on.

The add-on would allow for a second larger bag for the overhead locker, and those passengers would be among the first to board.

Jetstar said the availability of Priority Carry-on would be limited, and would start at $23 one-way on selected flights and vary.

For example, Dunedin to Auckland one-way would start at $23, Christchurch to Wellington one-way would be from $28, and Auckland to Brisbane from $34.

“We know that weighing carry-on bags at the gate can be frustrating for our customers and for our crew,” Jetstar chief executive Stephanie Tully said.

“To make packing easier we’ve decided to remove the 7kg weight limit, so from February, the main thing customers will need to think about is the size of their carry-on.”

Jetstar also detailed its size limits for underseat and overhead bags.

Underseat bags would have to be up to 40 x 30 x 20cm, and overhead bags with Priority Carry-on would have to be up to 56 x 36 x 23cm.

“By giving customers an underseat bag with the option to add Priority Carry-on, we can make better use of overhead locker space, streamline boarding and help more flights depart on time,” Tully said.

“Our new carry-on baggage model provides more choice to customers while helping to keep our fares low. You only pay for what you need – travelling with less means paying less, and you can always add more if you need.”

Jetstar said there were no changes to its checked baggage allowance.

It said customers with existing bookings for travel after 2 February 2027 would be upgraded to include Priority Carry-on at no cost.

Source: RNZ

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Business

Fake ‘New Zealand-based’ sites fool online shoppers

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Consumer New Zealand is warning online shoppers to be extra aware when attempting to buy Kiwi-made following a number of reports about online stores appearing to be local, when in fact they are based overseas.

A website called Mytamariki says it sells products that “support everyday family life in New Zealand”, however the business address and website is listed as being in Hong Kong.

Reviews of the website on Facebook and Trust Pilot have claimed products on the site are also available on AliExpress.

Consumer New Zealand chief executive Jon Duffy told Morning Report websites similar to these are becoming more common.

“Unfortunately they’re on the increase and it is really difficult for consumers to tell the difference sometimes.

“There’s different ways consumers can interact with websites that are pretending to be from New Zealand, but aren’t. It could be directly through a website like the Mytamariki example, but equally through places like Facebook Marketplace, Shopify, and other platforms like that.

“There’s ample opportunity for businesses to claim New Zealand origin, but not actually be from here.”

He says there are some simple things people can do if they are unsure if a business is legitimately based in New Zealand.

“If a business is claiming to be located in a particular location in New Zealand, do a Google Maps check, see if that shopfront is actually there.

“There was a recent example of a business claiming to be based in Arrowtown when it wasn’t, and that took in a number of people, but that business certainly didn’t have its shopfront on the main street of Arrowtown.

“The domain name commissioner, which is part of Internet NZ, registers all .co.nz and .nz domain names. So if a business purports to have a New Zealand domain name, you can look up who’s behind that business through the domain name commissioner.

“And if the website’s appearing to be a .co.nz website but they’re not registered with the domain name commissioner, that is a huge red flag and you shouldn’t deal with them.”

Duffy says it is not as simple as authorities having a website taken down, given the global nature of online retail.

“If a site is actively misleading people and it’s trading through a platform such as Facebook or Shopify, you can complain. Whether they take action, you kind of roll the dice.

“It’s illegal for businesses to mislead consumers in New Zealand, but often these businesses are based overseas. So regulators like the New Zealand Commerce Commission really struggle to do anything about misrepresentations about country origin and things like that when the business is based offshore.”

Duffy said there was a difference between a store being misleading and one being run by scammers.

“Some are just outright scams. They’re looking to take money off you and they never had the product that they said they were going to sell. So that’s out-and-out fraud. But other businesses will misrepresent what they’re selling to you.

“Using that Arrowtown example, it was advertising designer New Zealand-made clothing, but what turned up was cheap, Chinese-made product that didn’t match the description. So you got something, but it certainly wasn’t what you thought you were paying for.

“And then being able to turn around and deal with the website to get a refund as you would get if you were dealing with a genuinely domestically located store, proves very, very difficult.”

“Unfortunately, consumers need to protect themselves, because there’s very little the New Zealand authorities can do,” Duffy said.

Mytamariki has been contacted for comment.

Source: RNZ

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Breaking News

Two seriously injured near Levin after ambulance, gas truck collide

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A St John’s paramedic and a LPG delivery driver have been seriously injured in a crash on State Highway 1, north of Levin.

St John’s area operations manager Gareth Collings said a rapid response unit was caught up in the crash which happened at 10.40 am near Poroutawhao, north of Levin.

“The paramedic in the rapid response unit and the driver of the other vehicle were both treated for serious injuries and transported to Palmerston North Hospital by ambulance. Our thoughts are with those impacted by this incident and we are offering support to our people who were involved,” Collings said.

St John would be “supporting police” investigating the cause of the crash.

A Genesis Energy LPG delivery vehicle was involved in the crash.

A Genesis Energy LPG delivery vehicle was involved in the crash. Photo: RNZ / Samuel Rillstone

Genesis Energy’s Ed Hyde confirmed one of its LPG delivery drivers was involved in the crash.

“Genesis has another vehicle on the way to the scene to collect the LPG cylinders and we will work with emergency services to make the site safe,” Hyde said.

Workers on a nearby site told RNZ they saw a St John vehicle travelling north with flashing lights before the crash.

St John has been approached for comment.

A reporter at the scene said workers unloaded household gas canisters from the bed of a smashed-up truck outside Lewis Farms on SH1.

The truck has lost its front wheels and the damaged cab was resting on the ground.

More than 100 vehicles were backed up at a cordon before traffic was allowed through.

~ RNZ

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