ASB cuts two-year home loan interest rate

Tuesday, 7 December 2021

Borrowers have got used to home loan rates rising, but ASB has gone in the other direction by cutting its two-year fixed rate.

ASB has dropped its two-year fixed home loan rate from 4.35 per cent to 4.15 per cent.

The bank said it followed a drop in its funding costs as a result of moves on money markets.

Craig Sims, executive general manager retail banking, said the change gave home-buyers options in a rising rate environment.

“It’s been a challenging year for many,” he said.

**READ MORE:

Reserve Bank governor Adrian Orr voiced concern in August about the situation recent home buyers might soon be in, and since then prices have risen rather than fallen. (Video first published August 19, 2021)

* Why are deposit rates so low when home loan rates are rising so fast?

* Kiwibank and ASB lift term deposit rates as interest rate expectations rise

* ASB's 1.79 per cent floating mortgage rate: What's the catch?

ASB's big bank rivals ANZ, Westpac, Kiwibank and Bank of New Zealand were all charging 4.35 per cent for their two-year fixed rate home loans for people with equity of 20 per cent or more in their homes.

The two-year fixed rate offered borrowers the chance to fix some of their home loan costs, Sims said.

The Reserve Bank of New Zealand Te Pūtea Matua has warned that homeowners face rising home loan rates.

Its data shows that the average new two-year rate has increased from 3.47 per cent in June to 4.22 per cent in October.

A $500,000 mortgage over 25 years would cost $1262 a fortnight at 4.35 per cent and $1237 at 4.15 per cent.