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ASB takes a knife to all mortgage rates from 3 to 5 years with reductions that allow it to grab a market-leading position and open a bigger advantage over ANZ

ASB takes a knife to all mortgage rates from 3 to 5 years with reductions that allow it to grab a market-leading position and open a bigger advantage over ANZ
20th May 16, 11:11am by David Chaston

ASB has pushed down home loan rates further today.

But it is focusing its changes on terms of 3 to five years only.

It's new 'special' 3 year mortgage rate is now 4.39%, grabbing the market-leading title for this term off of BNZ who announced a 4.49% rate earlier this week.

ASB's 4.39% rate involves a cut of -26 bps from its prior 'special' for this term.

It took even more off its four year rate. That has dropped -41 bps to 4.59% and that is also market leading for that term. In this case it is trumping the HSBC Premier rate of 4.79%.

And for five years, ASB has adopted a 4.79% 'special' rate which is a cut of -36 bps. Previously the lowest five year rate was 4.99% which was offered by Kiwibank, the Cooperative Bank, HSBC Premier and SBS Bank.

These new ASB 'specials' give it a substantial advantage over its main rivals. Against the bank with the largest mortgage book - ANZ - it has opened up a meaningful price advantage which is sure to grab attention at the 'blue bank'.

ASB fixed housing special interest rates require a minimum of 20% equity in the security property provided to ASB. These home loan special rates are not available on loans for business purposes, bridging, or HomePlus.

Rate drops like this one are supported by substantial falls in the wholesale swap rates for these terms which are now well embedded.

The full comprehensive list of all home loan carded rates are here.

Here is where fixed rates stand after today's changes:

below 80% LVR  1 yr  18mth  2 yrs   3 yrs  4 yrs  5 yrs 
  % % % % % %
4.25 4.89 4.35 4.99 5.20 5.30
ASB 4.25 4.25 4.19 4.39 4.59 4.79
4.25 4.99 4.19 4.49 4.99 5.15
Kiwibank 4.29   3.99 4.75 4.90 4.99
Westpac 4.25 4.95 4.19 4.99 5.09 5.19
             
4.25 4.19 4.35 4.65 4.89 4.99
HSBC 4.25 3.95 4.39 4.59 4.79 4.99
HSBC 4.10 4.35 4.29 4.65   4.99
4.35 4.35 4.19 4.79 5.35 5.35

In addition, BNZ has a fixed seven year rate of 5.55%, while TSB Bank offers a fixed ten year rate at 5.75%.

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15 Comments

by  Boatman  |  20th May 16, 1:48pm 1463708938

There is not a snowball's chance in hell a Bank would price and lock in their loans at rates so low for so long, unless their ALCO committee were really 100% sure of themselves about their funding .

This tells you one thing , the ASB has been able to source a block of depositors funds ( such as carry trade ) from overseas for a very long term at a very cheap rate .

Its QE washing up here like debris from the great GFC

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by  ObeseBallerina  |  20th May 16, 8:13pm 1463732020

But they aren't low. That's why they want to lock you in for 5 years. This will look dear soon, and they know it.

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by  realterms  |  20th May 16, 2:48pm 1463712529

an idea. someone tell me where i'm wrong.

the banks' cheapest source of funding could be to borrow in a QE currency (USD/EUR/JPY) at very low rates, potentially long term, and then hedge the currency risk. e.g. EUR fixed rates + hedge cost + margin = NZ fixed rates.

as the NZD falls against those currencies, hedging the risk of further fall in the NZD becomes cheaper. thus lower cost of capital here, and lower fixed mortgage rates.

?

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by  Boatman  |  20th May 16, 3:00pm 1463713206

@ realterms ..........Or , even easier , get Mrs Watanabe to convert her Yen to Kiwi $ , bank it with ASB and then she hold the currency risk . EASY AS 1,2,3

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by  MortgageBelt  |  20th May 16, 4:44pm 1463719499

While fixed at 4.79% for 5 years, you may face short- term fixed rate of 3.99 2017, 3.5% 2018, 3.00 2019 etc .....

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by  Simon  |  20th May 16, 5:09pm 1463720989

I jumped on 4.59% for 4 years. Good enough for me pulling in net 7% in Palmy. I enjoy the certainty.

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by  facepalm  |  20th May 16, 6:58pm 1463727485

Nothing like a bit of certainty about rates for half a decade at 4.79%. Takes all the risk out of the mortgage for a decent period.

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by  MortgageBelt  |  20th May 16, 7:23pm 1463728993

Risk of what? Rising interest rates? Is that still a risk?

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by  bigblue  |  20th May 16, 9:45pm 1463737550

4.79% - you need a good broker

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by  ObeseBallerina  |  20th May 16, 9:59pm 1463738378

You got tucked mate.

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by  dotti  |  22nd May 16, 2:49pm 1463885397

Looks good compared to mine (still have 2 years to go on my 5 year fixed at 6.7%).

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by  ObeseBallerina  |  20th May 16, 8:12pm 1463731937

Finally! They are getting it! Rates aren't going up for a decade. Bring it on.

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by  bigblue  |  20th May 16, 9:45pm 1463737503

Locking in to any of the rates mentioned above would be very foolish. Rates are heading sub 4% maybe even sub 3% by the end of the year.

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by  Ginnypops  |  23rd May 16, 9:13pm 1463994783

I'm floating everything right now, have not fixed anything that has come up for renewal for 2-3 years now. Waiting to see how low they will go.

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by  KH  |  22nd May 16, 6:54pm 1463900079

Time banks got a bit more competitive on floating rates. I'm paying 5.25% but then I am not such an attractive customer as the balances are small and are reducing rapidly. But others last week on interest.co were paying 4.75 on a floating rate. When you hit the bank up for a deal, they will always talk fixed. Because then they have got you on a leash. Don't be diverted. Twist their arms for a deal on floating. You might find it interesting.

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