ASB is ending a week of sharply sinking fixed mortgage rate offers with a particularly aggressive new rate card.
ASB now has a full range of 'specials' that meet or beat the offers from their main rivals in every term but one. They are clearly setting the pace for the major lenders.
Their new six month rate has been cut by -34 basis points to 3.35%.
Their new one year fixed rate has been cut by -20 bps to 2.85% which just a new days ago would have been market-leading but is now an 'average' and not-so-competitive level.
ASB's 18 month fixed rate is also down by -20 bps to 3.05%, which just matches their main rivals.
But their new two year rate of 2.69% is their new fighting rate, and well below all-comers. This is the lowest mortgage rate ever, for any term, since home loans have been available in New Zealand. It will become the negotiating benchmark that all other banks will have to face.
Their new three year rate of 3.35% matches ANZ's offer.
Their four year fixed rate of 3.45% is lower than any of their main rivals and is a remarkable 100 bps lower than the ANZ offer for this term.
The same is true for ASB's new five year fixed rate of 3.55%.
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, or HomePlus and may not be available on bridging loans.
The new ASB offer becomes effective on Saturday, May 23.
Unlike Westpac, ASB has also reduced its Standard rates by the same amounts, keeping is margin between the two at 50 bps for all terms to 3 years.
ANZ, BNZ and Westpac have all recently launched new lower rate cards, but each is now off the pace again and will probably need to revisit their pricing again. Certainly they will need to advise their front line staff of new negotiation benchmarks. Customers will be emboldened to ask for "more".
Interestingly, the main bank most off the pace now is state-owned Kiwibank - and it is from them the next move is most likely to come.
As we have noted elsewhere, these sharp home loan rate decreases are going to mean more pressure on savers. Banks are adept at not announcing TD rate cuts at the same time, doing those separately but often so the decreases each sound small. But they are compounding to very low offer rates now for term deposit investors.
One useful way to make sense of these new lower rates is to use our full-function mortgage calculators.
And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options.
Here is the updated snapshot of the advertised lowest fixed-term rates on offer from the key retail banks at this time.
|Fixed, below 80% LVR||6 mths||1 yr||18 mth||2 yrs||3 yrs||4 yrs||5 yrs|
|as at May 22, 2020||%||%||%||%||%||%||%|
|Bank of China||3.89||2.79||2.89||2.89||3.19||3.79||3.89|
|China Construction Bank||4.70||2.80||2.85||3.19||3.30||3.45|
In addition to the above table, BNZ has a unique fixed seven year rate of 5.20%.