New Zealand's second largest home loan lender shifts its key carded rate offers lower for the three most popular fixed terms

ASB has reduced home loan rates for its three most popular fixed terms.

It has reduced its one year fixed rate 'special' by -10 basis points to 4.29%.

It has reduced its 18 month fixed rate 'special' by -10 basis points as well, now to 4.39%.

And it has reduced its two year fixed rate 'special' by -6 basis points to 4.49%.

These changes position its key mortgage rate offerings lower than all its big bank rivals, except for Kiwibank's 4.39% two year offer.

And of course, the new 18 month rate comes nowhere near the 3.85% HSBC Premier offer.

But the competitive distance opened up against ANZ, BNZ and Westpac will no doubt grab the attention of those rivals.

ASB has a national mortgage market share of about 22%, second only to ANZ which will be watching like a hawk.

In wholesale markets, swap rates have been little changed in more than a year, so wholesale money costs are not behind the move.

And today's REINZ sales volume data shows a real estate market with stable but lowish transaction levels. The likely driver of Thursday's rate changes by ASB is a market presenting an opportunity to nab some additional market share.

Mirror rate changes have also been made by Sovereign.

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

Here is the full 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 
as at June 14, 2018 % % % % % % %
               
4.99 4.35 5.15 4.55 4.99 5.89 6.09
ASB 4.95 4.29 4.39 4.49 4.79 5.39 5.59
5.35 4.39 5.05 4.55 4.99 5.89 6.09
Kiwibank 4.99 4.35   4.39 4.85 5.19 5.39
Westpac 5.25 4.39 5.15 4.55 4.94 5.89 5.59
               
4.80 4.29 4.45 4.55 4.89 5.39 5.59
HSBC 4.85 4.19 3.85 4.29 4.89 5.29 5.59
HSBC 4.99 4.29 4.59 4.55 4.99 5.49 5.55
4.85 4.29 4.39 4.55 4.89 5.55 5.69

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

And TSB still has a 10-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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24 Comments

Anyone keen to share the rates/discounts offered by the banks? I'm negotiating a construction loan so I'm particularly interested to know what discounts people are getting off the floating rates.

4.25% from anz for 6 months. sure beats floating . about a week ago .

Interesting to take a 6m when many 12m rates are lower than that?

Lol, some of the Anz brokers have asked me why I have been doing that for the last 3 years or so.It started because I was simply waiting for a sub 4 % rate. of course rates rose slightly , and I never got it . Since then I have always believed rates would go down , but for the last year or so , it has been because circumstances are likely to change in my business, that would effect it .
However , I don't think it is a bad strategy for others, especially compared to floating. For one thing , you can pay down your mortgage every 6 months , without penalty , as your term is effectively ended. Ideal for someone trying to get their equity up , or simply reducing the total term of the mortgage. Save hard and pay it off every 6 months. You could just go for a higher monthly repayment , but then you run the risk of defaulting .

Still inching lower, little by little.
At 3.85% it's certainly worth giving a call to HSBC

HSBC offer the best rates because they only accept the best quality borrowers. My experience across two countries, is that HSBC does the most stringent affordability and stress testing. They have always tended to have a more conservative lending culture than many other banks (regardless of the stage in the economic cycle). And that's probably why they get through the downturns more successfully, but don't do quite as well as other banks during the upturns (comparatively).

Thanks for your input GN, I didn't know that

Sure, but these offers often come with conditions, right? New borrowers only, maybe aggregate lending requirements, bla bla. And these offers do not reflect a reduction in lenders cost of funds, they represent the lenders sacrificing margin to maintain market share? At some point, they will have to restore their margins and reflect increased offshore funding costs (where surely there will be increases given movements in US interest rates). Banks here can’t cut their own throats forwever, which pretty much what they are doing in a static or declining market.

I'm pretty sure HSBC maintain healthy capital ratios. And because they cherry pick the best borrowers, they tend to have a lower risk profile.

I think that's a smoke screen.

They have such a small base in NZ they are cutting their lunch to increase share. If they fail to get to a meaningful share, they will not be able to justify their existence in the market. Of course, they subsidize this artificially low rate by gouging depositors - compare their TD rates with the majors - and not allowing these specials to be used for existing loans. They also have the worst variable rate. Add to that, having no branches, the product is very much no frills. Suits some, but not all

MisterB, yeah I tend to agree but there's a bit more too it. HSBC have really set their stall out there as being a global bank and they are also targeting global citizens who have assets and wealth across different countries. I don't think HSBC have invested much in their NZ franchise but I do think it's important to their global reputation to have branches all over the world.

Banks will still try to shaft you on a construction loan - maybe 2% on top of those rates. Brokers are still securing negotiated 4.09% rate for owner occupier home loans

This tells me just how desperate our banks are. However, they may be caught by events in the larger world.

Yeah, they’re cutting their own throats, right? They are just compressing margins to grab market share in a shrinking market, it’s a road to nowhere for them

All scrapping for a slice of an ever reducing pie.

Interesting that I picked up a 9month term deposit for 3.65% just a couple of weeks ago and there are mortgage rates going at 3.85%

I cant recall the margin between deposits and mortgage rates being so slim

Didn't Westpac recently issue a 5-year bond at 3.7%?

Hi Rick

it was ANZ.- they raised $500,000,000 I believe.

Lots of talk of scrapping for a smaller pie and reducing pie etc.. for those that haven't seen this before, Kiwibank made the play last week after HSBC led the way with a market beating rate. This is not about attracting new lending from First Home Buyers.... this is about re-positioning your companies mortgage book so that you are able to attract the very best borrowers with highest levels of equity and better prospects so that your banks have the best loan book. Prediction, HSBC will massively grow their market share over the next few years, mostly of existing borrowers who switch to their rates, they will cherry pick and you will have to have 40% equity at least to get their best rate (or they don't want you). Kiwibank have been pretty conservative and probably have fair degree of tolerance (they will find it easier to raise funds) so should be able to be quite competitive on rates. Westpac (who have leant the most in Oz (a lot of it late in the cycle) and ANZ here (probably carry the more stretched borrowers) - and will only compete to keep their best prospects - others will be switched to standard variable rates in the hopes that someone will take them off their hands. The beauty parade has begun and they'll only want the best.

Interesting. Although not sure about kiwibank, last time I looked their reliance on the residential mortgage sector was kinda frightening, way more than the others, so I do wonder if there is an element to trying to keep the borrowers coming in the door regardless of underwriting standards. I may be wrong.

Well the banks can’t be that keen for funds, going by my unpleasant experience today with BNZ to give new instructions for a $700,000 term deposit that is maturing. When i was eventually assigned someone who could do it by email correspondence with me (i am overseas) , the best rate they offered was not that great. In fact they wasted time corresponding to try and upsell me a product. There is quite a time difference and i was losing valuable hours. I presed for better rates, cited other banks, but the BNZ person got high-handed and sent me quite dismissive replies demanding that i prove it. Eventually buried in one scolding email was an offer of a good rate which i then instructed to accept. One hour later, and no reply, no confirmation
of instruction executed. TD matures tomorrow. I suppose it turned 5pm there and they went home.

In that regard, I can't recommend ASB enough. The customer service is grand. We have a wealth manager and she rings me every time she see's a chunk of money coming in, I don't ever need to contact her, and she always gets me better than the advertised rate, I don't even have to ask or negotiate. They've certainly retained more of our custom because of how good the customer service is.

Thanks, GN. I will look into ASB. Years ago, BNZ ‘s service was as you describe yours with ASB -seamless, intelligent - but about 4 years ago everything changed and since then i have had no regular contact person. Every email request involves a new person or on the times i have simply gone through the website contact i have been treated with condescension and as if i am a naive and gullible person to be exploited. It is as if BNZ are doing me a favour by allowing me to bank with them. However, in occasional face to face encounters in my rural small hometown when i am back on a visit, they are great.

just gave ANZ a big bunch of money. Should have seen GNs advice and gone ASB. Working with ANZ was a bureaucratic nightmare, quite Kafkaesque. Although it must be acknowledged there was the additional problem of meeting the anti money laundering nightmare

So it is the next morning. I check my emails. Nothing from BNZ about my term deposit, not even a statement of confirmation, or even, a sorry we could not do this. I call up my account online, they have not carried out my instructions so the TD has rolled over for 2 months at a lousy 1.4 per cent. I’ve been with them for over 20 years but that is it. My Singapore friends will be shocked at the client service. KH, sorry to hear about ANZ, as i have accounts with them. So it kooks like ASB, here i come.