Why did the Co-operative Bank cut its floating rate before the next OCR announcement?

With markets already pricing a Reserve Bank cut on 28 May, moving early positions the bank to attract new customers and signals confidence that funding costs will keep easing.

How does the new 5.95 % rate compare with other lenders?

The next-cheapest floating rates among major banks are 6.50–6.70 %, making Co-operative’s offer roughly 55–75 bp lower.

Should I break my current floating or fixed loan?

Break costs don’t apply to floating loans, but fixed borrowers must weigh any early-repayment fee against potential savings. Use your bank’s calculator or talk to a broker first.

Co-operative Bank Cuts Floating Mortgage Rate to 5.95 %

Co-operative Bank Cuts Floating Mortgage Rate to 5.95 % — First Sub-6 % Offer Since 2023

Co-operative Bank branch with mortgage rate advertisement — The Co-operative Bank’s new 5.95 % floating rate is at least 50 bp below its closest rivals.

In a surprise move on 14 May 2025, the Co-operative Bank trimmed its floating mortgage rate by 25 bp to 5.95 %, marking the first time any New Zealand lender has posted a floating rate below 6 % in more than two years.

The cut arrives two weeks ahead of the Reserve Bank’s next Official Cash Rate (OCR) review on 28 May — a meeting that markets already expect to deliver another 25-bp easing. By jumping early, Co-operative is banking on lower wholesale costs and the chance to scoop up rate-sensitive borrowers before rivals respond.

1 / How Big Is the Gap Now?

Most major banks still charge 6.50–6.70 % for a standard floating loan, so Co-operative’s new offer is around 0.55 – 0.75 percentage points cheaper. Fixed specials remain lower — the average one-year fix is 4.99 % — but floating debt is valued for flexibility, especially if you plan extra repayments.

2 / What Could You Save?

A homeowner with a NZ$500 000 floating mortgage at 6.60 % pays about NZ$3 163 a month. Switching to 5.95 % cuts that to roughly NZ$2 986 — a saving of NZ$177 per month or NZ$2 124 a year. Use those savings to shrink principal faster or build an emergency buffer.

3 / Why Move Before the RBNZ?

Market positioning: Early movers grab headlines and potentially lock in customers before competitors match the rate.
Funding confidence: Bank swap-rate costs have already fallen in anticipation of further OCR cuts this winter.
Customer goodwill: Passing savings on quickly supports the brand’s “customer-owned” ethos.

4 / Will Other Banks Follow?

History says yes — but not instantly. Major banks often wait for the Reserve Bank decision to confirm market trends. Watch floating rates from ANZ, ASB and BNZ in the fortnight after 28 May. Fixed terms could drift a little lower too if wholesale funding stays subdued.

5 / Smart Moves for Borrowers

Compare immediately: Get quotes from at least two lenders — you may have leverage to negotiate matching cashbacks or other perks.
Split your loan: Keep a portion floating (to make lump-sum payments) and fix the remainder to hedge against future rate swings.
Check your break fees: Fixed borrowers should ensure savings exceed any penalty. Many banks waive or reduce fees if you refix with them.
Stay liquid: Resist new borrowing temptations; use lower payments to boost savings or pay down high-interest debt first.

Frequently Asked Questions (FAQ)

Q. Does the 5.95 % rate apply to existing Co-operative Bank customers?
A. Yes — but from 29 May. New customers get the rate immediately.
Q. Are floating rates risky?
A. They can rise quickly if the OCR rebounds. Fix a portion of your debt if you need payment certainty.
Q. Could floating drop even further?
A. Economists see room for one or two more OCR cuts by spring, but nothing is guaranteed. Keep an eye on inflation data and global risks.

📌 About the Author

Kiwi Money Matters is written and maintained by a New Zealand-based writer with hands-on experience in finance and accounting since 2015.

All posts are personally researched, written to ensure clarity and trustworthiness for everyday Kiwis.

Search This Blog