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ASB becomes the first main bank to eliminate the difference between 'standard' and 'special' home loan rates, saving about 50 bps for most first home buyers

ASB becomes the first main bank to eliminate the difference between 'standard' and 'special' home loan rates, saving about 50 bps for most first home buyers

ASB is offering all its home loan 'specials' to buyers who don't have at least a 20% deposit.

They have changed all their 'Standard' rates to their 'Special' rates.

ASB is the first of the main banks in the market to have a single rate card offer. Challenger banks Heartland, Co-operative Bank and HSBC already offer this, as well as community-targeted banks Kookmin and Bank of Baroda.

ASB says "this change is going to save our low equity first home buyers thousands of dollars each over the course of their home loan repayments".

This doesn't change the relative offers for borrowers who have at least 20% equity, but it will mean lower interest rates for those who don't.

It will save those borrowers about -50 bps.

While the rate card difference has been shifted lower, remember that ASB still has low equity margins that will still apply.

And banks are now more focused on income security when agreeing to fund a new home loan.

Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at this time. Those marked ♦ still have Standard rates for borrowers with less than 80% equity and those Standard rates are higher than rates in this table.

Fixed, below 80% LVR 6 mths   1 yr   18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
as at July 16, 2020 % % % % % % %
ANZ ♦ 3.55 2.55 2.65 2.69 2.79 4.15 4.25
ASB 3.55 2.69 2.65 2.69 2.99 3.09 3.19
4.29 2.55 2.69 2.69 2.99 2.99 2.99
Kiwibank 3.55 2.55   2.79 3.25 3.45 3.55
Westpac 4.79 2.55 4.25 2.69 2.79 2.99 2.99
Bank of China ♦ 3.45 2.55 2.65 2.65 2.75 2.85 2.95
China Construction Bank ♦ 4.70 2.65 2.65 2.65 2.80 2.89 2.99
Co-operative Bank 2.69 2.69 2.75 2.75 2.99 3.19 3.29
Heartland Bank   2.89   2.97 3.39    
HSBC 2.95 2.60 2.65 2.65 2.80 2.89 2.99
ICBC ♦ 2.95 2.58 2.79 2.68 2.79 2.99 3.45
 ♦SBS Bank 3.39 2.79 2.79 2.69 2.99 3.09 3.19
 [incl Price Match Promise]  2.99 2.55 2.65 2.69 2.79 2.99 2.99

In addition to the above table, BNZ has a unique fixed seven year rate of 5.20%.

Fixed mortgage rates

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More desperate measures indicate more bad times expected ahead and more to come as wage subsidy comes to an end along with mortage defferal though that will extended - have to.

Yup. Don't worry, everything is fine, just fine. Nothing to see here.

What could possibly go wrong ?


Irrespective of whether one thinks it is a good time or bad time for FHB to buy, it is pleasing to see a level playing field.
I have been posting for the past couple of weeks that bank lending has been disadvantaging FHB with a high LVR premium over carded rates while those with a slightly lower LVR (mainly investors) are advantaged with a special rate below carded rate. In practice this meant most FHB were paying rates 1% above investors.
And before anyone starts spluttering in their morning coffee about lending in gay abound;
- Banks have become a lot, lot tighter on both one's income security and job security such as casual relief teachers without confirmed hours are being downgraded or ignored, employment with risky companies also downgraded
- they are seeing receipt of the wage subsidy as a red flag,
- the 6.2% to 7% interest rate test is still being applied, and
- they are critically looking at valuations and considering a range of factors.
Personally, cashed up and ready, but still sitting, watching and waiting. Probably sound advice for FHB also.

A good summary of the situation.
The hard part is ahead of you though ( as I'm sure you know!) - deciding when, or if, to get up from your seat.

Level playing field... hah, nice one. I'm sure banks are these philanthropic organisations that are all about providing a level playing field for rich and poor alike. Perhaps the "be kind" mantra has entered the banking sector?

Glad we took the plunge when we did 3 years ago, it was hard back then as we were a single income household and the amendments to responsible lending code had literally just come into play. Couldn't imagine trying to do the same now, even as a dual income household.

Good grief.

Low equity premiums are fair enough.
"Leveling the playing field" is a rubbish equality argument.

Lending is all about managing credit risk.
With less equity you are, objectively, a higher credit risk and that risk should be priced accordingly

As is the case if you have casual work arrangements (i.e. relief teachers).
You're a higher credit risk due to less certain serviceability.

I appreciate, with all the stimulus and rank distortion, that it's easy to forget that a Bank's business is managing credit risk. But FYI, that's the beginning and end of their business model.
There is no valid 'fairness' argument here.

I agree - although they could apply the risk premium more fairly. Even at 20% equity you are still a risk (ask Ireland).
They probably should just have base rates and then a risk premium on top (which is I think what ASB are now doing).

Yeah, could be more of a sliding scale.

And they should have to hold more assets against investor lending and slap on higher risk premia.

So you clearly support investors being advantages over FHB who meet the same test criteria.
Rather sad that you feel that way.

Nope, I just posted another comment above at the same time you posted this - you should check it out.

But, sure, try to make managing credit risk a violin-playing exercise.

If you're really, truly, worried about FHBs then the best thing for them would be lower prices.
Not more, but ever-so-slightly cheaper, debt.
If you don't agree then, to borrow a phrase; rather sad that you feel that way.

Like Richie McCaw you play the game to conditions.
You comments are sounding much like those of Quade Cooper.
Richie just won a turnover - be pleased for it :)

Like Richie McCaw you play the game to conditions.
You comments are sounding much like those of Quade Cooper.

This is not a very clever or apt analogy.

The best thing that could happen for FHB (if the 'be kind' COL brigade were truly concerned) would be to remove/reduce draconian GST of 15% on new home prices - which adds $90,000 to a modest $600,000 (GST included) FHB price and their mortgage.

At what cost to the government books?

It would also result in an immediate drop in prices for all recently built houses, which the owners won't take kindly to.

The credit risk decision is taken at the approval stage, approval policies aren't changing, if anything they might be tighter. How the risk is priced is a different problem. This isn't "the end of their business model" good grief.

It is not incentive to FHB at this time but poaching.

More alertness required from FHB particularly now.

I will take a loan when they pay me interest. Period.

So never, then. Very bold negotiating tactic.

Never say Never..

I think by the time they're paying people to take out loans in NZ, our economy will have collapsed.

Great news for FHBs!

Great for me!
Wife and I are doing a new build but with less than 15% deposit. This just shaved off a decent percentage.

Don't count your chickens before they hatch.. have you got an approval from ASB?

Sure do. All sorted. We have quite secure jobs which helps.

Great to hear Logan
This move clearly removes the premium you were paying although you meet all the banks other risk criteria.
Your situation and outline of your proposed action compared to other properties (in the BOP I think) as you have previously posted makes sense. The bank - in their vested interest - would not be lending to you if they thought you were of a significant risk.
As long as you can service the mortgage and have income security - which your previous posts indicate that you have - you have little to be concerned about short term fluctuations the market which at the moment are at a heightened likelihood.
You are getting on with life and providing long term social and financial security for your family, as well as the intrinsic value of homeownership.
You have your self sorted, are fully aware of the risks and have the initiative to get on with life unlike a number on this site who have been by their own admission been posting for five years of a impending bubble burst. Unlike the estimated120,000 FHB over the past three year, I am sure that these knockers will be in the same position paying off their landlord’s mortgage - something In the future they will come to regret.

Thanks mate.
Yep spent a lot of time on this site trying to figure out what is best for us. We went ahead with the new build after securing finance. Currently going through the deposit stage now and hopefully unconditional in the next week or two.
Thanks for the advice throughout!

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Seems like this is completely mispricing the risk.

I always had a problem with paying the same rate as others when my mortgage was ~10% LVR... considerably less risk to the bank than a 90% LVR loan.

This just promotes people to lever up.

Seems like a step toward the American housing debacle that started in the late 90s and ended in 2008 .... all premised on the assumption that house prices only go up.

Yeah it's kind of perverse as well, if you have a small mortgage they're less likely to give you a good rate because they don't care so much if they lose your business.

Their setup and maintenance costs will be the same on a small or large home loan though, so their margin per dollar lent will be higher on larger loans - which gives them more room to discount rates on those loans.

Banks mispricing risks? What? Where is the regulator? As long as taxpayers are not called to bail them out, they can misprice risk as long and as high as they want.

The regulator wants house prices to increase too.


Hi David, you say that Co-Op doesnt have 'standard rates' for loans over 80%. According to their site they do (and your mortgage table) Their standard card also applies to investor loans and is 0.50% higher.