ASB jumps first, raises mortgage rates by 10 to 50 bps (Update 3)
7th Aug 09, 9:11am
In another sign that mortgage rates are rising despite the Reserve Bank's Official Cash Rate remaining on hold, ASB, Bank Direct and Sovereign raised 18 month, two, three, four and five year mortgage rates on Friday morning by between 10 and 50 basis points (bps). Variable, six month and one year rates remained unchanged. (Update 3 with average mortgage rate chart.) The move may disappoint politicians and the Reserve Bank, which have argued the banks could have cut some shorter term mortgage rates more over the last year as the Official Cash Rate was cut from 8.25% to 2.5%. The Reserve Bank had also hoped to stave off increases in mortgage rates by promising to keep the OCR at or below 2.5% cent until the latter half of 2010. If other banks follow ASB, the increase in the mortgage rates that most home buyers use could dampen any housing recovery likely to coincide with a rush of new listings in the spring. ASB's economists released a survey today showing most home buyers now expect house prices to rise and many expect interest rates to rise. ASB raised its 18 month rate by 10 bps to 6.1%; its two year rate by 30 bps to 6.55%; three year by 50 bps to 7.45%; four year by 40 bps to 7.95%; and five year by 30 bps to 8.3%. The new two, three, four and five year rates are now the highest standard mortgage rates for a bank in New Zealand. BNZ is offering an 18 month rate of 6.19%. Bank Direct's 18 month, two, three and five year rates were raised by the same amounts and sit 5 bps below the corresponding ASB rates. They do not offer a four year rate. ASB's wholly-owned subsidiary Sovereign also raised mortgage rates. They are priced at 10 bps above ASB's rates. See and compare all mortgage rates on our mortgage rates page.