ASB has launched a 4.95% fixed one-year 'special" residential mortgage rate effective from today.
The bank says, however, the offer is only available to borrowers with a: minimum of 20% equity, being a loan-to-value ratio (LVR) of less than 80%; an existing ASB credit card; and their main bank transaction account with ASB. Furthermore, ASB says, it's not a carded rate change.
ASB's move comes after interest.co.nz learned ASB affiliate Sovereign Home Loans was about to lower its one-year fixed mortgage rate to 4.95% from 5.19% for home loans with LVRs of up to 80%.
And it follows rival Westpac yesterday saying it'll launch a one-year 4.94% fixed-term "special" rate on Wednesday. This compares with Westpac's standard one-year rate of 5.19%, and is being offered to borrowers with at least 20% equity in their property and with minimum new lending of NZ$100,000. Westpac is increasing its two-year rate by five basis points to 5.45% from 5.40%.
Westpac's 4.89% in February 2013 4.94% rate is was the all-time lowest carded (advertised) rate for a one-year fixed term for any bank, ever. The record low two-year rate is 4.99% which is offered by a number of banks currently.
In February and March earlier this year, Kiwibank had a 4.79% rate fixed for six months, which was the lowest fixed rate of all time.
The latest rate moves come after ANZ launched a one-year 4.95% offer on Monday, on the heels of BNZ's 4.95% one-year move.
Kiwibank's one-year rate is 5.25%, but it has a two-year rate at 4.99% and doesn't require an 80% LVR limit.
ASB refocusing away from high LVR lending?
The LVR criteria on the ASB offer is a key new step from the bank, perhaps indicating a shift away from a focus on high LVR lending. Over the past two quarters ASB grew home loans by NZ$1.7 billion with NZ$1.4 billion, or 84%, coming in lending where the borrower has a deposit, or equity in their property, worth less than 20% of the loan.
The Reserve Bank recently moved to make the big four banks hold an average of 12% more capital against their housing loans to cover any potential losses from high LVR lending, which adds up to about NZ$500 million between them, or the equivalent of NZ$125 million each. The central bank and prudential regulator said about 30% of all new residential mortgage lending was at LVRs over 80%, up from about 25% in late 2011 and early 2012.
And in a Budget announcement earlier this month, Finance Minister Bill English and Reserve Bank Governor Graeme Wheeler signed a memorandum of understanding clearing the way for the central bank to use its so-called macro-prudential tools, if it chooses to, on a temporary basis to dampen excessive growth in credit and asset prices and strengthen the financial system.
The four tools include the potential for the Reserve Bank to introduce restrictions on the share of high LVR residential mortgages being made by banks. English said this could include restrictions on the share of new high-LVR lending that banks may undertake, and outright limits on the proportion of the value of the residential property that can be borrowed to create a minimum equity buffer for the lender.
See all advertised mortgage rates here.
| 1 yr | 2 yrs | 3 yrs | 4 yrs | 5 yrs | |
 |
4.95% | 5.45% | 5.80% | 6.10% | 6.30% |
 |
4.95% | 5.45% | 5.75% | 5.95% | 6.25% |
| BNZ | 4.95% | 5.40% | 5.80% | 6.10% | 6.30% |
| Kiwibank | 5.25% | 4.99% | 5.65% | 5.99% | 5.99% |
 |
4.94% | 5.45% | 5.90% | 6.15% | 6.25% |
| Co-op Bank | 4.99% | 5.35% | 5.75% | 5.99% | |
| HSBC Premier | 4.99% | 4.99% | 4.99% | 5.50% | 5.75% |
| SBS / HBS | 4.99% | 4.99% | 5.65% | 5.99% | |
 |
5.25% | 5.30% | 5.75% | 6.10% | 6.30% |
TSB Bank still has a low rate Special 15 month offer of 4.95%.
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