ASB moves to improve the competitiveness of a key rate as wholesale rates fall, and real estate transactions slim down in a softening market

ASB has not been able to hold its higher two year fixed rate and has adjusted it down today (Friday).

Their website now shows its 2 year 'special' at 4.79%, a reduction of -5 bps.

It had raised that rate by +10 bps on July 7 from 4.74% along with hikes for their four and five year rates at that time.

Today's change does not include adjustments to those longer rates.

ASB's standard two year rate has also been reduced, by -5 bps to 5.19%.

Part of the space allowing this reduction will be a drop in wholesale rates. Since ASB last moved in early July, the two year swap rate has fallen from 2.33% to day's 2.19%, a -14 bps fall. But more generally, today's two year rate is actually only back to the range that was in place from mid-May to the end of June.

Amother reason for the drop might be that the mortgage market is getting very competitive in a zer-sum sort of way. Real estate transctions are falling fast, and mortgage volumes are likely to be following.

No compensating term deposit rate changes are reflected on their website this morning.

The same two year rate change applies at Sovereign, and at BankDirect.

Today's change sets ASB's two year rate the same as its rivals BNZ and Kiwibank and below the carded offers from ANZ and Westpac. It also matches the offer from TSB Bank, although no-one comes near the HSBC Premier rate.

We have not yet received a formal advice of the ASB reduction; it has only just appeared on its website. But we have received a formal advice of the change from Sovereign.

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

Here is a snapshot of the fixed-term rates on offer from the key retail banks.

below 80% LVR 6 mths  1 yr  18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
  % % % % % % %
4.99 4.55 5.15 4.85 5.59 5.89 6.09
ASB 4.95 4.45 4.70 4.79 5.09 5.59 5.79
5.35 4.59 5.05 4.79 5.09 5.89 6.09
Kiwibank 4.99 4.45   4.79 5.09 5.75 5.99
Westpac 5.25 4.59 5.15 4.85 5.09 5.89 5.59
4.80 4.59 4.75 4.85 5.25 5.55 5.75
HSBC 4.85 4.09 4.09 4.29 4.89 5.29 5.59
HSBC 4.99 4.59 4.85 4.85 5.25 5.65 5.85
4.85 4.55 4.75 4.79 4.99 5.65 5.79

In addition to the above table, BNZ has a fixed seven year rate which is 6.15%.

And TSB Bank still has a ten year fixed rate of 6.20%.

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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Maybe best not to fix or refix just yet.
Short term fixed rates may yet go lower.

If the housing correction continues this will only be the start. I keenly await the next mortgage growth stats. Well down I would expect.

Not surprising since oncall deposit and term deposit rates have also been dropping again.

One of these banks is significantly lower than the others? Why would people choose an Australian bank?

If you mean HSBC premier.... it's not really apples with apples. They only deal with loans $500k+ and also I have heard from multiple sources that their service is sub par, they have little in online banking and of course no branch footprint. Most people with big mortgages want to be looked after.

If you're comparing the Aussies with the NZ banks... I see SBS has basically the worse rates in every term!

Also, if you're a low risk (and good at haggling), you can get a similar rate.

Trump vs Kim Jong-un will screw up this interest rate lowering trend big time if anything happens.

Trump vs Kim Jong-un will screw up this interest rate lowering trend big time if anything happens.