ASB takes -10 bps and -20 bps off most fixed mortgage rates, taking its 18 month 'special' to a market leading low. Westpac also trims a key rate (and cuts two term deposit rates)

ASB and Sovereign have reduced all their 'special' carded mortgage interest rates with fixed terms of 18 months and longer by -10 bps today.

And they have reduced all their standard rates by between -10 and -20 bps.

Westpac has also reduced a rate, taking their two year 'special;' down -5 bps to 4.74%.

Today's changes come after Kiwibank and SBS Bank announced selected reductions a week ago.

The ASB moves open up a decided advantage for them in the 18 month space - that is a rate at least 45 bps lower than any of their main rivals, and it is also lower than most of the challenger banks. Only HSBC has a lower 18 month rate, for their Premier customers.

The mortgage market is tough at present. Not only are we in the off-season, real estate sales volumes are falling and buyers are apprehensive about where house prices are headed. The election also makes buyers naturally wary.

But banks are starting to position themselves for the post election and the up-coming spring house selling season. Getting a jump on it might seem like a good idea to some mortgage marketing managers.

Helping them is the general fall in wholesale swap rates, allowing these price reductions.

But that will have a dampening effect on term deposit savers.

And we have seen that today with Westpac reducing their four and six month term deposit rates by -15 and -20 bps respectively. ASB did not make any term deposit rate changes their announcement today, however.

The last time ASB changed rates was on August 11, 2017 when it trimmed its two year rate to meet the market.

See all banks' carded, or advertised, home loan interest rates here.

Here is a snapshot of the fixed-term rates on offer from the key retail banks.

below 80% LVR 6 mths  1 yr  18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
  % % % % % % %
4.99 4.55 5.15 4.75 5.59 5.89 6.09
ASB 4.95 4.45 4.60 4.69 4.99 5.49 5.69
5.35 4.59 5.05 4.79 5.09 5.89 6.09
Kiwibank 4.99 4.45   4.65 5.09 5.75 5.99
Westpac 5.25 4.59 5.15 4.74 5.09 5.89 5.59
               
4.80 4.59 4.75 4.79 5.09 5.55 5.75
HSBC 4.85 4.09 4.09 4.29 4.89 5.29 5.59
HSBC 4.99 4.59 4.85 4.79 5.25 5.49 5.85
4.85 4.55 4.75 4.79 4.99 5.65 5.79

In addition to the above table, BNZ has a fixed seven year rate which is 6.15%.

And TSB Bank still has a ten year fixed rate of 6.20%.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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12 Comments

"The ASB moves open up a decided advantage for them in the 18 month space" - in that they are the only bank to have set a rate that makes any sense whatsoever...

4.45 for 2 years on the cards still. With biggest drop in mortgages 'sold' by our banks expect more of the same until the property market get excited again - nothing fundamentals changed as far as supply and demand so this current lull in sentiment is only temporary. Kiwis live property and fear of missing out can be trigger very easily

4.49 with them today without negotiating - waiting to see if they will do a bit more - not sure the rates will last though - change in government now likely and that will definitely lead to higher inflation and then interest rate rises - not saying its a bad thing - but Labour not concerned about house owners and property investors - and dont really get the fact that'an extra 50-100K at 4.4 % is a dam sight more affordable than 100K less but 7.5% on a normal FHB loan in auckland!

These banks should be careful, they need to save some ammo because they haven't that much, in 2008 interest rates were over 9% because of trying to slow that bubble with dept getting out of control so the RB and banks had a good 5% to help with the downturn in property, they only have about half a % and that'll be close to the 4.19% when the RB was where they still are now , and thats a all time low for the RB, I think?, save some ammo in case of a recession, this could easily last for 4 or more years , especially with this dept load and demand downturn and distance to get to being affordable again, overseas investors won't be back to save the day

Tumble, tumble, tumble, along with saving rates. I'm sure the Boomers won't be happy about that.

Who's going to want to save, doesn't matter banks won't be giving out mortgages anyway

It isn't just savers. it is also people who have kiwisaver, as some funds will be in normal bank deposits. But it certainly isn't an incentive to save, and just devalues peoples savings buying power by creating asset bubbles.

Interest rates are very high in NZ, most of Europe, US are around 1%

Actually, US rates are ~3%.

Remember it's a two sided coin too.... you dont get any interest on deposits in countries with 1%-2% retail lending rate.

UK is between 2-4%. But they also have other restrictions I believe. Their house prices aren't too bad compared to NZ and their incomes, especially outside London. North England is very cheap.

You should be able to secure 3.95% for 18 months tenure with HSBC

Spring competition should bring 1 and 2 year carded fixed rates under 4.5% so just wait a few weeks before fixing/refixing. A major global negative event will bring rates down even lower.