Mortgage rates higher here than Oz: are we being ripped off?

Bank’s mortgage rates remain higher in New Zealand despite the cash rate being the same.

The NZ Herald wrote an article today stating that New Zealaners are being ripped off by our banks.

On Wednesday the Reserve Bank of New Zealand cut the official cash rate to be the same as Australia’s, from 1.75 per cent to 1.5 per cent.

Our major banks have reduced their floating rates by 10 or 15 basis points but they haven’t passed on the full rate cut to customers.

Sam Stubbs, managing director of KiwiSaver provider Simplicity, believes the difference in rates means Kiwis are being ripped off.

He says it is because of the lack of competition in New Zealand vs Australia. The New Zealand market is dominated by Aussie owned banks, where there is more competition in Australia.

He also said on a wealth adjusted basis, the New Zealand arms of the Australian banks made 20 per cent more from an average New Zealander than their equivalent Australian.

The Australian banks have setup a giant money making machine in NZ, extracting over $14m in profits every day.

However, everyone is not in agreement with Stubbs.

Read the full article here: https://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=12229165.

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