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Price war heats up with ASB move

Homeloan rates continue to fall in the wake of the Reserve Bank's OCR comments and weak business confidence numbers this week. ASB has slashed its three, four, and five year interest rates, joining rivals in a competitive race for borrowers.

Thursday, April 4th 2019, 12:00PM

ASB's three year rate is now 3.95%, its four year rate 4.35%, and five year rate 4.45%. The latter rate marks a drop of 69 basis points, as lenders make bets on rates staying lower for longer. 

The move is likely to push its big four rivals to make a move, with smaller bank TSB pledging to match its latest offer through its price-match promotion. 

While ASB's long term rates are creeping down, the bank has bumped up its 12 month offerings. Its one year and one year special are priced at 4.49% and 4.09% respectively.

Nevertheless, long term rates and short term rates are edging down across the market. Co-op Bank cut its one year rate to 3.99% this week, while SBS cut its two year rate to 3.99%. 

Meanwhile, BNZ reacted late on Thursday by cutting its three year rate to 3.95%, matching ASB. BNZ's offer comes into effect tomorrow.

ASB Senior Economist Jane Turner, (pictured) told TMM Online that borrowers can expect low rates for a "reasonable amount of time", through 2019 and into 2020. She predicts the Reserve Bank's capital adequacy rules will see mortgage rates eventually rise, but said this would be "very gradual".

Turner added: "We don't think interest rates will remain low and people should plan for a higher rate environment. In the meantime, we expect low rates to give the economy the extra kick it needs."

ASB's move follows Kiwibank's decision to cut its five year rate to 4.29% in the wake of the Reserve Bank's move to an OCR easing bias. Sovereign's five year special at 4.45% is the next best price on offer, alongside ASB's.

Headwinds in the domestic and global economy are likely to see the central bank cut rates in May and August, according to the pricing of wholesale interest rate markets. Gloomy business confidence figures this week further add to the expectation of an imminent OCR cut, economists said.

Take a look at what's on offer in the market here.

Tags: ANZ ASB BNZ Kiwibank OCR OCR forecasts

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 ▼3.89 ▲4.05 4.39
ASB Bank Special - ▼3.39 ▲3.55 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 4.14 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.39 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.02 4.09 4.39

Last updated: 22 November 2019 4:35pm

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