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Simplicity offers record low 2.25% mortgage, and predicts rates will go lower


19/08/2020

Low mortgage rates v2

Simplicity, New Zealand’s lowest cost mortgage lender and KiwiSaver manager, reduced its floating mortgage rate for first home buyers to 2.25% today.

This is lower than any mortgage, fixed or floating, provided by any bank.

“Mortgages appear to be going in one direction, down,” said Sam Stubbs, Simplicity Managing Director. “And there's still room for them to go lower, especially if the Reserve Bank take interest rates to zero, or below zero.”

Mr Stubbs was critical of current bank lending rates, which he said appeared low, but were in fact high.

“If Simplicity can lend at 2.25%, the banks, with their massive scale, should be able to lend at even lower rates,” he said. “But they don’t, because they're hard wired to squeeze every cent out of Kiwis, even with Covid-19 making it tough for hard working families.”  

“Even though the banks have seen profits decline, they're still tracking at over $4 billion profit this year,” Mr Stubbs explained. “That’s $11 million a day, after tax."

The ANZ bank has just announced a quarterly profit of $351 million to the end of June, 10.7% lower than pre-Covid levels. 

“That means that during lockdown, they were still making $3.8 million profit from ordinary Kiwis, every day,” said Mr Stubbs. 

“Does that feel like a company really helping Kiwis when we most need it? From our biggest bank and most profitable company, we deserve better,” he said.

Mr Stubbs is also critical of the billions in extra interest payments from mortgage ‘holidays’, which Finance Minister Grant Robertson confirmed yesterday had been taken up by over 83,000 homeowners. 

“Holiday is a nice word, but in this case a very expensive one,” he said.

For example, for a family with a 20 year, $500,000 mortgage paying 4% interest, it means another $15,000 in interest payments over the life of the loan. That’s $15,000 more for the bank, $15,000 less for the homeowner.

“That might fund a holiday for bank executives, but for the rest of us it means more interest to pay,” said Mr Stubbs.

Simplicity was the recent recipient of the 2020 Consumer NZ People’s Choice award and Canstar’s ‘Most Satisfied Customers’ for KiwiSaver award for the second year in a row. 

Morningstar’s performance survey to 30 June confirmed Simplicity as New Zealand’s best overall performing KiwiSaver manager for the past three years.

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