The FMA publishes how much of the OCR cuts banks pass through to mortgage borrowers, but acknowledges it has no legal power to make them pass on any particular amount.
The Financial Markets Authority monitors and publishes data on how much of the Reserve Bank's Official Cash Rate cuts flow through to mortgage borrowers — but the regulator has no legal lever to act if banks pass on less than the full cut.
That's the acknowledgment from Michael Hewes, the FMA's Director of Deposit Taking, Insurance and Advice, in remarks reported by interest.co.nz. The FMA tracks OCR pass-through as part of its conduct oversight role under the Conduct of Financial Institutions (CoFI) regime, not because it has pricing authority over banks.
What the data shows
Since the RBNZ began cutting the OCR in August 2024 — reducing it by 325 basis points to 2.25% by November last year — floating mortgage rate reductions across major banks have varied significantly:
| Bank | Floating rate reduction | Current floating rate | |------|----------------------|---------------------| | Co-operative Bank | 341 bps | 4.99% | | ANZ NZ | 270 bps | 5.79% | | ASB | 285 bps | 5.79% | | BNZ | 285 bps | 5.84% | | Kiwibank | 275 bps | 5.75% | | Westpac NZ | 275 bps | 5.89% |
Co-operative Bank's 4.99% floating rate stands out — well below the major banks. CEO Mark Wilkshire has questioned why others haven't cut as aggressively, saying Co-op's rate reflects a "reasonable margin."
The FMA began publishing OCR pass-through data in August 2025, a commitment made when its CEO Samantha Barrass appeared before the parliamentary banking inquiry last year. At the time, Barrass told MPs the time taken to pass on OCR changes was something the FMA would "pay very close attention to."
The moral suasion toolkit
The gap between what the FMA monitors and what it can enforce illustrates a broader pattern in New Zealand banking regulation: the regulator uses transparency and public pressure rather than hard rules to change behaviour.
Hewes said the FMA's role under CoFI is to ensure banks treat customers fairly — but "the FMA is not a pricing regulator and cannot determine the rates that a bank must offer its consumers." The FMA intends to continue publishing the OCR pass-through data over time to build a series that supports its engagement with banks on their conduct obligations.
The banking inquiry itself resulted in several areas where government and regulators have relied on "moral suasion" — informal pressure — rather than legislation to drive change.
Implications for borrowers
For borrowers on floating rates, the data shows meaningful variation between lenders — and a meaningful gap between the full OCR reduction and what most major banks have passed on. However, switching lenders involves costs and complexity, and floating rate borrowers may have other considerations (flexibility, offset facilities, existing relationships) that complicate the calculation.
The FMA's monitoring does not constitute advice to switch. Borrowers with questions about their mortgage should discuss options with a licensed financial adviser.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.