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ASB drops low-equity fee

ASB’s decision to replace its one-off low-equity fee with a low-equity margin is being tipped to put pressure on the only major bank left in the market offering a fee.

Tuesday, February 16th 2016, 12:00PM

by Susan Edmunds

ASB - and Sovereign - has announced it will add a margin on any lending over 80% LVR.

For borrowers between 80% and 8%, the low-equity margin will be 0.3% per year. Between 85% and 90%, it will be 0.75%. Between 90% and 95%, it will be 1.3% and over 95% it will be 1.5%.

ASB said in a note to brokers: “The new low-equity margins reflect the costs associated with high-LVR lending. These include increased capital adequacy requirements on high-LVR lending imposed by the Reserve Bank of New Zealand.”

After six months, customers can apply for a reduction to a lower low-equity margin band or the removal of the margin with an updated valuation or when the loan balance drops.

The fee will continue to apply to applications received before February 23.

Loan Market adviser Bruce Patten said it was a significant shift. He said it seemed to indicate ASB was trying to bolster pricing on lending and trying to do less over 80%, or to get a better return on it. “There’s a bit of margin squeeze going on or the banks are trying to hold margin.”

He said the move would put pressure on ANZ, which is the only major lender without a margin. It still charges a one-off fee. “They’ve got a big book under 80% and they are writing the lion’s share of over 80% anyway,” he said. “It could put a squeeze on them. It does change the dynamic.”

It would mean other banks charging a margin were less likely to change that, he said.

The difference between paying a 0.75% fee once, upfront, to ANZ and paying 0.75% every year the loan remained in the 85% to 90% band could be quite significant, he said.

Tags: ANZ ASB

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Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora ▲5.43 ▲4.57 ▲5.58 ▲5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 ▼5.14 6.05 6.15
TSB Special 4.79 ▼4.34 5.25 5.35
Unity 5.65 ▲4.80 ▲5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 17 May 2022 10:54am

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