One Aussie-owned major breaks ranks, cuts floating rate to 5.55%, chops all fixed rates in key challenges for their main rivals

One Aussie-owned major breaks ranks, cuts floating rate to 5.55%, chops all fixed rates in key challenges for their main rivals

ASB will cut its floating mortgage rate by 20 basis points to 5.55% in response to the Reserve Bank's 25 basis points Official Cash Rate cut.

At the same time, it's chopping its fixed rates across the board.

These changes are effective March 16 for new customers and March 24 for existing customers.

(Update: A previous version of this story had an error in the effective dates of rival banks, as did the table below. This update corrects those mistakes.)

ASB is not giving any reason for holding on to the 5 bps, presumably content to hide behind the ANZ and Westpac announcements.

Their PR focus is on trumpeting the fixed rates reductions, many of which are challenging for their rivals.

Taken as a whole, these ASB reductions do challenge the ANZ and Westpac contention that "higher wholesale costs" mean withholding 15 bps is a necessary business decision.

We doubt it is justifiable, and will offer our opinion tomorrow morning.

But the fact that minnow Co-operative Bank can pass the full 25 bps cut through, a bank that has no wholesale funding, tells a lot.

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

Floating Prior rate New rate Change effective from
  % % % for existing clients
OCR 2.50 2.25 -0.25 March 10, 2016
5.74 5.64 -0.10 March 29, 2016
ASB 5.75 5.55 -0.20 March 24, 2016
Kiwibank 5.65 5.45 -0.20 March 24, 2016
Westpac 5.85 5.75 -0.10 March 29, 2016
5.70 5.45 -0.25 March 11, 2016
HSBC 6.10 5.75 -0.35  
ICBC 5.60      
HSBC 5.74 5.59 -0.15 March 16, 2016
5.74 5.54 -0.20 March 15, 2016

Here is where the fixed rates stand after the ASB reductions:

below 80% LVR  1 yr  18mth  2 yrs   3 yrs  4 yrs  5 yrs 
  % % % % % %
4.39 4.95 4.49 5.10 5.25 5.35
ASB 4.15 4.15 4.39 4.65 5.00 5.15
4.39 4.99 4.49 4.64 5.40 5.50
Kiwibank 4.39   4.49 4.75 4.90 4.99
Westpac 4.39 4.95 4.39 4.80 5.25 5.35
4.39 4.39 4.49 4.75 4.99 5.15
HSBC 4.25 3.95 4.39 4.59 4.79 4.99
HSBC 4.35 4.35 4.35 4.65   5.29
4.35 4.69 4.29 4.79 5.35 5.35

In addition, BNZ has a fixed seven year rate of 5.90%, while TSB Bank offers a fixed ten year rate at 5.75%.

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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They are good rates that ASB has. Will be interesting to see if it is just a publicity stunt that lasts only for a few weeks, or if the other banks will relent and reduce their rates to a similar level.

We fixed for 2 years at 4.35% about a month ago. I am not regretting it yet, but time will tell.

The other banks are flipping the bird at Wheeler

"A small sting is that the floating rate change won't apply to their existing clients until ten days later than the dates announced by their rivals" --- your other articles on ANZ, Westpac & Kiwibank showed effective dates of 24th March or later also?

ASB bank is good they have a heart we having many borrowings with them and look after us from bank rates to no bank fees.Good on Mike Pero for introducing us to them over 14 years ago -yes Mike himself did the intro.

what do you mean only .05% considering the 4 BILLION profit from the Australian banks have made those greedy banks should've past the entire cut on...

We sold all the banks mate, they make as much profit as they can. Ultimately though they have helped most people get rich in the property market so you will not hear that many complaints.

"higher wholesale costs" ? A few bps above 0% movement is hardly a major change, whilst the Ocr and swap rates have moved down significantly.