Kiwibank, ASB drop home loan interest rates below 3 per cent for the first time

Thursday, 7 May 2020

Kiwibank chief executive Steve Jurkovich thinks a crisis amplifies the challenges and opportunities for leaders.

ASB and Kiwibank are set to offer interest rates below 3 per cent for the first time.

ASB is offering a two-year rate of 2.99 per cent, and Kiwibank a one-year rate.

Craig Sims, ASB executive general manager of retail banking, said the reduced rate would help New Zealanders manage their home loans during what has been a challenging period, as well as support others into home ownership.

“This has been a difficult time for a lot of our customers. While we have put in place a number of support options, including mortgage repayment deferrals and interest-only payments, we’re continually evolving what we are doing to help Kiwis get through the impact of Covid-19. Offering this two-year special rate is part of that.

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ASB's offer is available from Friday while Kiwibank's will be effective from Monday 11.

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“We know every bit helps and we’re proud to be supporting New Zealanders with this special low rate which we hope will help our customers manage their home loans. We’re also confident it will be welcome news to those first home buyers looking to start their home ownership journey,” he said.

ASB's offer is available from Friday while Kiwibank's will be effective from Monday 11.

“Customers with a fixed interest rate expiring within the next month are likely to roll on to a new interest rate 1 per cent lower than their current rate,' said Kiwibank general manager of product Nicole Pervan,

“On an average-sized loan this will reduce repayments [between] $50 to $70 [ a week] which will go a long way at this time. Customers have the flexibility to pay off their loan faster or keep that money in their back pocket for a rainy day.”

It's not the first time the New Zealand customers have had access to rates below 3 per cent.

HSBC currently offers a one-year or 18-month rate of 2.95 per cent.

Interest rates are predicted to remain lower for longer because of the Covid-19 outbreak.

The Reserve Bank has pledged to keep the Official Cash Rate at 0.25 per cent for 12 months, although Westpac economist have predicted that it could drop to -0.5 per cent in November.