ASB and subsidiary BankDirect have cut their one to five-year fixed-term home loan interest rates by between 10 and 20 basis points effective Friday, January 27. TSB Bank has also announced fixed-term rate cuts, and one hike, effective Friday.
ASB said the one-year rate is being cut 10 basis points to 5.70%. two-year by 15 basis points to 5.85%, and three, four and five year rates by 20 basis points to 6.10%, 6.50%, and 6.90%, respectively.
The bank left its floating, six month and 18 month rates unchanged at 5.75%, 5.75% and 5.80%, respectively.
“Given the interest rate outlook following the Reserve Bank of New Zealand rate announcement, we think it is important that customers have competitive options to consider between floating and fixed rates,” Mike Davy, ASB's general manager for lending, said.
“ASB is offering competitive fixed rates in all terms, including the most competitive 18 month and 3 year rates among the major banks."
TSB's moves
TSB has cut its six month fixed-term rate by 10 basis points to 5.75%, its one-year rate by 5 basis points to 5.70%, its two-year rate by 10 basis points to 5.78%, its three-year by 20 basis points to 6.25% and its four-year by 25 basis points to 6.60%. However, the bank has increased its 18-month fixed-term rate by 4 basis points to 5.89%.
The lowest advertised six-month rate from a bank is HSBC's 5.49% available to its premier customers, followed by Westpac's 5.59%. The lowest one-year rate is Westpac's 5.59%, the lowest two-year TSB's 5.78%, and the lowest four-year Kiwibank's 5.99% "special." ASB's new five-year rate is the lowest for that term.
Meanwhile, the lowest advertised floating rate is 5.65% from SBS Bank and its HBS Bank operating division and also from Kiwibank. See all bank advertised mortgage rates here.
The Reserve Bank today left the Official Cash Rate (OCR) at its record low of 2.5% on Thursday and in its statement didn't comment on when it may begin hikes. Most economists don't expect the central bank to hike the OCR before September at the earliest, with some now not picking an OCR rise until 2013.
Earlier this week SBS Bank cut some of its fixed-term home loan mortgage rates, on the heels of ANZ and National Bank doing the same last week, after surprisingly weak inflation data for the December quarter led to a fall in wholesale interest rates.See more on this here.
(Update adds TSB moves).
9 Comments
Let's think (worst case scenario) this through from the corporate suits (1%) point of view:
"Let's tempt the peasants currently on floating (5.75) onto a 1 year fixed (5.7%) [next to nothing discount] so that if off-shore borrowing rates move up in 6 months time they are locked in while we ramp up the floating rates and other fixed rates. Heh heh ... "
Or is that simply paranoia?
Haha, not really but ....
Just quoting the ASB rates in the article.
Just trying to think what is the motivation by ASB etc to set the 1 year rate just lower than the floating?
If you are floating, and ready to fix if you think prudent, then this might tempt you. Then once you fix for one year on the slightly lower (than floating) rate - then you have lost the flexibility to fix from a range of choices for the next 12 months. Imagine fixing now for 12 months, then in August rates start rising, then by the time you come off the fixed 1 yr you have to take a bigger jump ....
Or are these small cuts just marketing and aimed at new borrowers or switchers?
People should know to ignore the shelf rates. My ASB floating mortgage is 5.5% - I'll now be asking for a further reduction as I have heard of 5.25% in some cases. Always ask the bank for a better rate and threaten that you're moving to KiwiBank, that seeems to help too. So many people out there just accept those headline rates giving the bank lots of lazy margin.
What level of equity do you have if you dont mind me asking? And do you have substantial deposits etc to use as bargaining chips with the bank?
I ask because I've never haggled hard with our bank but am in a position to I think and am more than willing to jump ship to kiwibank if no preferential treatment is on offer.
Definitely ask for a better rate.
Westpac - as a general offer, will give 5% floating to anyone who is a member of NZICA
ASB - initially offered 5.25%, but then offered to reduce it to 4.98% when they found out what Westpac would give me
I haven't taken either of them up on the offer, because there is too much uncertainty in the market. But if you don't ask, they won't offer it...
*edit* plus they will also throw in up to $1k for legal fees, and pay for up to five free valuations *unedit*
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