ASB cuts all its fixed mortgage rates again, taking market leading positions for many terms, after raising some very cheap funding. It cuts term deposit rates too

ASB cuts all its fixed mortgage rates again, taking market leading positions for many terms, after raising some very cheap funding. It cuts term deposit rates too

ASB has cut fixed home loan rates across the board, according to updates that have appeared on their website this morning (Thursday).

These cuts give them market-leading positions for 18 months fixed, as well as for 3 year, four years, and five years.

And their two year fixed rate of 3.69% beats all other banks for that term other than China Construction Bank. This level also matches ANZ's, BNZ's and Westpac's new low one year rate.

ASB recently closed a wholesale funding round, raising $600 mln at the remarkably low rate of 1.83%. Given ASB's market share, that will only be enough for a few thousand mortgages, but it is a good advantage anyway.

At the same time, ASB has cut most of their term deposit rates. We will update where the market stands for term deposit rates in a followup story soon.

Wholesale swap rates have held at their new lower level so far all this week, but after today's market rout, it seem slikely that they will sink further from here too.

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

Fixed, below 80% LVR 6 mths  1 yr  18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
as at August 15, 2019 % % % % % % %
               
ANZ 4.29 3.69 3.99 3.75 3.99 4.85 4.95
ASB 4.29 3.75 3.75 3.69 3.89 4.19 4.29
4.79 3.69 4.55 3.75 3.99 4.35 4.45
Kiwibank 4.79 3.79   3.79 3.99 4.29 4.39
Westpac 4.99 3.69 4.79 3.75 3.99 4.35 4.45
               
Co-operative Bank 3.79 3.79 3.79 3.84 3.99 4.29 4.39
China Construction Bank 4.70 4.85   3.65 3.90 4.95 4.95
ICBC 5.15 3.79 3.79 3.75 3.99 4.29 4.39
HSBC 4.85 3.79 3.79 3.79 3.89 4.19 4.29
HSBC 4.99 3.78 3.78 3.78 3.99 4.49 4.49
  4.55 3.85 3.89 3.79 4.05 4.45 4.55

In addition to the above table, BNZ has reduced its unique fixed seven year rate by -25 bps to 5.70%.

All carded, or advertised, term deposit rates for all financial institutions for terms of less than one year are here, and for terms of one-to-five years are here. And term PIE rates are here.

Fixed mortgage rates

Select chart tabs »

The '6 months %' chart will be drawn here.
Loading...
fixed rate 
floating rate
unweighted
The '1 year %' chart will be drawn here.
Loading...
fixed rate 
floating rate
unweighted
The '2 years %' chart will be drawn here.
Loading...
fixed rate 
floating rate
unweighted
The '3 years %' chart will be drawn here.
Loading...
fixed rate 
floating rate
unweighted
The '4 years %' chart will be drawn here.
Loading...
fixed rate 
floating rate
unweighted
The '5 years %' chart will be drawn here.
Loading...
fixed rate 
floating rate
unweighted

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?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

48 Comments

Comment Filter

Highlight new comments in the last hr(s).

Lately I've been consoling myself by noting that my 3 year mortgage at 3.95% was still competitive. Not any more, cruel, cruel world.

The difference is insignificant Zac.

Not to worry Zachary old mate, by this time next year the mortgage rates will be down to the mid 2% mark and perhaps lower. Ahhh.. wait you did say you fixed for 3 years..... Ahh well. Any luck we might be out of the latest Asia finical crisis when you next have to renew your mortgage.

For those who some time ago question my view that "lower interest rates will be bad for mortgage holders/property owners" (or words to that effect!), have a look about you this morning. What do you see? I'll tell you what I continue to see - mortgage rates half what ASB offers today and asset prices backed by borrowings, fallen in a heap.
Borrow today, by all means, but don't apply the debt; 'save' it for use at some time in the future....(NB: Use an Offset Account to park funds - costless, because come 'tomorrow' banks may not be wanting to lend to you. Get it whilst you can etc)

Lower rates are great for mortgage holders, I pay less than half the interest I used to pay (8.5%) which allows me to repay much more principal of my mortgages. Surely a great thing

In addition lower rates lead to lower yields for commercial properties hence an increase in values

On top of that lower term deposit return will see some depositors move their money into property either directly or through REITS or funds/ share market which means more demand for RE

I don't quite see how lower rates lead to lower yields with commercial property. I saw that before in an article too and thought it was a typo.

You need to get used to him not making sense.
I can only guess that he means with lower interest rates, buyers of commercial will accept lower yields, hence driving asset price inflation (bubble).
Obviously "lower rates don't lead to lower yields" they increase your yield.

That's OK, ZS many don't understand yields properly and Miss The Point. Easiest way to understand it is via an example.
A buyer of a commercial property would be looking at being at least cashflow neutral so he would want to get a yield similar to the cost of borrowing which is about 5.5% for commercial (note outgoings are generally paid by the lessee). If the cost of borrowing drops by say 0.5% the buyer will also accept a lower yield, hence the price of the asset goes up
Example: you own a property that generates $100k pa in rent and has a yield of 5.5% so it's worth $1.818 M ($100k/5.5% if the yield drops to 5% the values goes up to $2 M ($100k/5%
Lower borrowing cost => lower yield => higher asset price

You need to sort your English out. Lower borrowing cost does not equal lower yield.
It leads to buyers accepting a lower yield when purchasing as I have stated above. This is not what you first stated.
If I own a property commercial property and my interest rates drop my yield rises.

I think Yvil is talking opportunity cost. As the perceived value of the property goes up (from cheaper credit) the yield is less.

Correct, well done for understanding my poor english, NZ Dan

Its not that bad, these guy just purposely avoid the semantic implication of sentences. If you cant argue the point, argue the language...

Merci, je pense que mon anglais est meilleur que son français

Yeah I assume I've won the argument when they resort to attacking your punctuation, English etc. I get it a lot in the American forums I participate in, where they can't comprehend spelling / grammar is different in different parts of the world ( I do try to use their spellcheck when posting).

Saving, say, $500 per week on interest cost when the asset underlying the borrowing it is secured by is falling thousands of dollars a week will prove to be a false economy - it's one of the Roads to Ruin. Maybe property hasn't started the 'thousands of dollars a week' depreciation yet ( that's what all this futile rate cutting is partially about) but if that ever gets going two things will happen:
(1) 'Owners' will become trapped with their assets; some, perhaps many, will have to sell ( either voluntarily or by 'request' of their lenders) and
(2) Mortgage rates will get savagely cut, even more, to try to forestall the inevitable. ( Rinse Point (1) and repeat....)
We'll all know how it pans out in the, not too distant future!

Funny thing is that the 'not to distant future' can often be several decades away. I dont see what is so unique today that leads you to think the death knell is tolling. Its not like i dont see that the system is broken i just dont see whats so special just now?

I got offered 3.64% for 1 year by ANZ for a mortgage that is up for renewal mid September. Interestingly I did not ask for any rates

Given that these cuts are aimed at stimulating the economy it would be interesting to see what the rate delta is for fixed loan customers and the volume of lending taking over that would benefit. Like an overview of how many additional dollars are being freed in the economy by falling retail rates.

I would be pushing for 3.40% for 1 or two year if looking to lock in.. or just delaying until the spring selling season when banks will really start to compete for business

People that don’t own property now should seriously be looking to buy!
You will miss out again if you wait and believe everything you read on here about prices crashing.
What other investment gives you the return and security that property does and that is why it is so popular.
You can still obtain returns far in excess of Term Deposits and certainly far safer than the sharemarket which nothing surer will have some black days in the future.

From my initial investment 8 years ago in my business, I made a return of 200% last financial year, and I didnt have to sell the assset, and its actual cash. The asset is worth roughly 4 times the money I invested at the outset. Housing could never do what this has done for me.
The only reason I would buy a house is to live in it, but I feel like black days are coming in the housing market, and probably every market. Housing is popular, because everyone needs one to live in. Its like saying water is popular.

But with property, you can tell yourself there is no risk at all. It is much harder to pretend starting a business is 0 risk.

The MAN 2 wasn't writing about owning your own business though. I'm sure he would be all for it if it was as lucrative as you say.

Sluggy, not sure what type of business you are doing, so very hard to comment.
How many hours are you working?
We are making money each and every year guarantee and capital gain assured.
No comparison to what property investment done well is!!

For the first few years I worked all the hours God gave me, its a bit different now, this year Ive had 2 months out of NZ on holiday. Sure i still do some 12 hour days, but I also do some 2 hour days, I like working. We import/export/distribute product all over NZ and the South Pacific.

Sluggy we are getting great returns without putting any money in!

Do tell how you bought your fist property without putting any money in?

I will tell you exactly how I bought my first property with no money of my own. I got 80% mortgage from the bank and I asked the vendor to leave the remaining 20% in as a second mortgage in exchange of paying full asking price, he agreed.

See there are always ways if you spend your time trying to make something work rather than spend your time sarcastically belittling others and look for every reason why something won't work

That story is getting a bit old, I've heard it at least 3 times now. Yawn.
So you and The Man 2 are the same person?
https://www.youtube.com/watch?v=EuJzSTNDUGI

If you have heard this story already 3 times, why do you ask the question? Do you still not understand how to buy a property with no money down?

Was I asking you?

Here's an exact quote of your question, word for word:

by Mrs The Point | 15th Aug 19, 4:16pm
Do tell how you bought your fist property without putting any money in?

You can't read English either? So you are The Man 2?
Seems clear you can't follow the thread.

And here's your answer:

I will tell you exactly how I bought my first property with no money of my own. I got 80% mortgage from the bank and I asked the vendor to leave the remaining 20% in as a second mortgage in exchange of paying full asking price, he agreed.

Nice one Sluggy. Must be a very satisfying position to be in.

That's awesome Sluggy well done!!!
It doesn't have to be business OR real estate, I own both, and like you and TM2 say they are very, very different, each with their benefits and their drawbacks.

There is more than one way to skin a cat is the point I was making, looks like you are skinning a couple of cats !!

Gotta subtract your own cost as a manger form those profits sluggy. Depending on what you paid it may actually be a very bad performance. The more you paid the better the performance but if you didnt spend much then your own time is a major factor to consider. Consequently the data you presented by itself does not help anyone understand if your purchase actually did outperform property.

Bad day again in the US stock market. Trump is jumping up a down like a loony. My exact words on the news with regards to Trump "Not wanting a crash on his watch" that I applied to the Labour party a while back. The OCR rate has been cut because a blind man can see the problems coming before the next OCR review, they are just getting ahead of the curve. The big question is how are we going to handle it ? borrow even more and keep the housing market going or is it going to fall off a cliff ?

Carlos67, housing won't "fall off a cliff" unless a lot of people are forced to sell. We are very far from this situation

We are now in uncharted waters, anything is now possible. Timing will be everything. Once the panic starts, who knows where it will end. We are not far from any situation. While unemployment is low its all great, loose your job...cannot pay the mortgage....it goes bad pretty quick.

Don't worry so much Carlos, things are nowhere near as bad as you think, enjoy life : )

Yvil, I'm not so worried about me, currently all cashed up, I'm worried about others currently in debt up to the eyeballs. You shouldn't be as naive as to think that the plight of the masses somehow will have zero effect on you. You would be worried if you woke up one morning and found out you were in negative equity in a big way.

Good on you for being in a good financial position. Then don't worry about others… worrying is a horrible feeling, it's a feeling that something may (or may not) happen in the future. In actual fact right now is fine, so if you worry now about a potential bad thing in the future, you're robbing yourself of the present time, which is actually fine.

I kinda gotta agree with you, there must be a metric ST of people in Auckland who currently have a mortgage that will soon be larger than the value of the property... This is going to be delicate indeed.

Wouldn't be so bad if property prices had gone up at 3 or 4 % per year but the last RV in 2016 had the price of my property going up 46% in 3 years. People have now bought at the current prices and the potential for falls are the same as the gains if the right set of worldwide conditions come about.