ASB first bank to raise 5 year mortgage rate back to 8%

ASB first bank to raise 5 year mortgage rate back to 8%
ASB has become the first bank this year to raise its five year mortgage rate back up to 8%. ASB raised its longer term rates by between 20 and 50 basis points (bps) in the wake of sharp moves higher in longer term wholesale rates in New Zealand and globally as investors fear heavy government borrowing and bond issues. The move was accompanied by ASB's Bank Direct, and pre-empted by ASB's Sovereign raising its three, four and five year mortgage rates late on Thursday. The last time a major bank in New Zealand had a five year mortgage rate at 8% or above was at the end of November, over six months ago. ASB raised its three year rate by 20 bps to 6.95%; its four year rate by 30 bps to 7.55%; and five year by 50 bps to 8.00%. The new rates are effective now. ASB's 5 year rate hit a low of 5.95% in late January and its sharp move back over 6% in February was an early indicator of longer term fixed rates rising across the board in mid-March. This sparked a rush by some floating mortgage borrowers into longer term fixed rates through late March, despite a 50 basis point fall in the Official Cash Rate on March 12 and another 50 basis point cut on April 30. ASB's insurance and mortgage arm, Sovereign, announced that it would raise its three, four and five year mortgage rates on Friday by between 20 and 50 basis points (bps). Sovereign distributes via brokers and directly. Mortgage rate announcements by Sovereign are almost inevitably followed by ASB a day or so later. Sovereign raised its three year mortgage rate by 20 bps to 7.05%; its four year rate by 30 bps to 7.65%; and five year by 50 bps to 8.10%. Bank Direct raised its three year rate by 20 bps to 6.90%; and its five year rate by 50 bps to 6.95% 7.95%. See all the latest rates on our mortgage rates page.

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