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Last Article Uploaded: Saturday, November 27th, 11:42AM

Mortgages

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ASB hikes rates across the board

ASB has become the first major bank to hike interest rates across the board as New Zealand's economic outlook improves.

Wednesday, July 14th 2021, 7:56AM 2 Comments

Effective this morning, ASB has increased a broad range of home loan interest rates from six month to five year terms. 

One year and two year rates jump by 36 basis points to 2.55% and 2.95% respectively. 

Six month, 18 month, three, four and five year rates increase by 30 basis points to 3.29%, 2.79%, 3.29%, 3.69% and 3.99% respectively. 

The hikes represent a major shake-up for the mortgage market which has experienced mostly downward pressure on rates since the Covid crisis, until the past few weeks. 

The interest rate increases could mark a turning point for mortgage rates, with other large banks expected to follow. 

It comes as the Reserve Bank makes its latest official cash rate announcement this afternoon.

The RBNZ is expected to leave rates as they are, but is tipped to signal plans for rate hikes later this year. 

ASB said its decision to raise rates was based on the improving economic outlook, with metrics such as inflation and house prices increasing rapidly as the economy gathers steam. 

Craig Sims ASB’s executive general manager of retail banking, said: "The New Zealand economy is proving robust, and the economic outlook has improved. While interest rates are now increasing, they remain at historically low levels.

"We’re mindful that some first home buyers in particular have only ever experienced the current low-rate environment. When we assess a home loan application we use a ‘test rate’ that is substantially higher than current mortgage rates to give customers the confidence they can continue to make payments if rates increase.

"We encourage home lending customers to talk to us about their options, which could include spreading mortgage amounts over different terms to give certainty over time or making extra payments while rates are very low."

ASB has also increased its term deposit rates in line with the mortgage hikes. 

The decision to break from the rest of the market and lift rates comes a matter of weeks after it unveiled a 1.79% 'Back My Build' loan product for new builds. The product will remain in place, Sims said.

Tags: ASB interest rates Mortgage Rates

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Comments from our readers

On 16 July 2021 at 8:28 am Rob Thumath said:
"ASB said its decision to raise rates was based on the improving economic outlook...Craig Sims ASB’s executive general manager of retail banking, said: "The New Zealand economy is proving robust, and the economic outlook has improved. While interest rates are now increasing, they remain at historically low levels"
Really? That's the justification to grab $millions more margin? As if their profits aren't fat enough? The COGS (money) has not gone up at least on short term rates

And no-one says dicky-boo
On 17 July 2021 at 1:59 am Dougal MacGibbon said:
Definitely smells very much of profit taking while they can use 'good for the nation' reasons to justify it. Load of bollocks...since when was it the banks business to be the nations policeman.

Simply padding their own excessive annual earnings and as the gent above states, no-one says a word.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.65 4.35 4.69
ANZ ▲4.79 ▲4.25 ▲4.95 ▲5.35
ANZ Blueprint to Build ▲2.03 - - -
ANZ Special - ▲3.65 ▲4.35 ▲4.75
ASB Back My Build 2.04 - - -
ASB Bank 4.45 3.65 4.35 4.69
Avanti Finance 4.55 - - -
Basecorp Finance 5.49 - - -
Bluestone 3.74 3.54 3.89 4.09
BNZ - Classic - ▲3.65 ▲4.35 ▲4.69
BNZ - Mortgage One 5.15 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Rapid Repay ▲4.95 - - -
BNZ - Std, FlyBuys ▲4.95 ▲4.25 ▲4.95 ▲5.29
BNZ - TotalMoney ▲4.95 - - -
CFML Loans 5.15 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 3.59 4.09 -
Heartland Bank - Online 2.25 1.85 2.35 2.65
Heretaunga Building Society 5.25 4.00 4.60 -
HSBC Premier 4.49 2.19 2.45 2.69
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 4.15 ▲3.29 3.85 4.19
Kainga Ora 4.43 2.88 3.28 3.59
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 4.05 4.34 5.00 5.34
Kiwibank - Offset 4.00 - - -
Kiwibank Special 4.05 3.49 4.15 4.49
Liberty 4.84 - - -
Nelson Building Society 4.95 3.99 4.59 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.39 3.54 3.89 4.09
SBS Bank 4.79 3.65 4.19 4.25
SBS Bank Special - 3.15 3.69 3.75
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 3.29 - -
The Co-operative Bank - Owner Occ 4.55 3.49 4.15 4.49
The Co-operative Bank - Standard 4.55 3.99 4.65 4.99
TSB Bank 5.34 4.09 4.74 4.99
TSB Special 4.54 3.29 3.94 4.19
Unity 5.65 4.15 4.60 -
Wairarapa Building Society 4.99 3.55 3.89 -
Lender Flt 1yr 2yr 3yr
Westpac ▲5.09 4.25 4.95 5.29
Westpac - Offset ▲5.09 - - -
Westpac Special - 3.65 4.35 4.69
Median 4.67 3.59 4.27 4.49

Last updated: 26 November 2021 9:41am

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