Westpac Cuts Longer Home Loan Rates After Dovish RBNZ Review

WELLINGTON (Azat TV) – Westpac New Zealand has announced significant cuts to its longer-term fixed home loan rates, a move set to take effect on Monday, February 23, 2026. This decision follows a more dovish-than-anticipated Official Cash Rate (OCR) review by the Reserve Bank of New Zealand (RBNZ) on Wednesday, February 18, which has reset financial market expectations for future rate changes. The bank’s adjustment positions its three-year fixed rate as the only sub-5% offering among the five largest banks, intensifying competition in the mortgage market.

Westpac is decreasing its three-year fixed home loan rate by 16 basis points (bps) to 4.99% per annum. Its four-year fixed rate will see a reduction of 20 bps, falling to 5.19% per annum, and the five-year fixed rate will also drop by 20 bps to 5.29% per annum. These adjustments come shortly after several other major banks had recently increased their longer-term fixed rates, highlighting Westpac’s strategic response to the evolving economic landscape and central bank signals.

Westpac’s Rate Cuts Shift Market Dynamics

The timing of Westpac’s rate reductions is particularly notable, occurring just days after the RBNZ’s latest OCR review. The Reserve Bank’s stance, perceived as more dovish by financial markets, prompted a reset in expectations for interest rate trajectories. This shift was immediately reflected in wholesale swap rates, with the five-year swap rate falling by 22 bps from 3.70% to 3.48% and the three-year swap rate also decreasing by 22 bps from 3.37% to 3.15% between February 13 and February 20. These movements in underlying market rates provide banks with scope to adjust their retail offerings.

Sarah Hearn, Westpac NZ managing director of product, sustainability and marketing, affirmed the bank’s continuous efforts to provide competitive options for its customers. The move underscores the dynamic nature of the New Zealand mortgage market, where banks frequently adjust their rates in response to central bank policy, wholesale funding costs, and competitive pressures. Westpac’s decision to cut longer-term rates while not announcing changes to term deposit rates, suggests a focus on stimulating lending in the home loan sector.

Competitive Landscape and Borrower Implications

The rate cuts by Westpac are expected to put pressure on other major lenders to review their own offerings, particularly for longer-term fixed mortgages. For instance, ASB, another prominent bank, had recently raised some of its longer-term fixed rates, increasing its two-year fixed mortgage rate by 20 bps to 4.95% and its three-year rate from 5.09% to 5.19% on February 9. Conversely, ASB had also cut its six-month fixed rate by 6 bps to 4.59%.

Westpac’s new 4.99% rate for a three-year fixed term stands out as the only one below 5% among the largest banks, potentially attracting borrowers seeking stability and lower repayments over a longer period. For homeowners with existing fixed-term mortgages, the current market environment, characterized by falling rates, makes assessing break fees crucial if they consider refinancing. The availability of online tools, such as home loan comparison and mortgage calculators, becomes increasingly valuable for consumers navigating these rate changes and negotiating with lenders.

The strategic move by Westpac, aligning with a dovish RBNZ, signals a significant shift in the competitive landscape for New Zealand home loans, potentially offering a window of opportunity for borrowers seeking more favorable long-term fixed rates.