SBA lowers interest rate on two-year home loans
Kirk Hargreaves / Stuff
Borrowers got used to rising mortgage rates, but ASB went the other way by lowering its two-year fixed rate.
ASB lowered its two-year fixed mortgage rate from 4.35% to 4.15%.
The bank said it tracked a drop in its funding costs following moves in the money markets.
Craig Sims, executive managing director of retail banking, said the change provides options for homebuyers in a rising rate environment.
“It’s been a tough year for many,” he said.
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ASB’s big rival banks, ANZ, Westpac, Kiwibank and Bank of New Zealand, were all charging 4.35% for their two-year fixed-rate home loans to people with 20% or more net worth in their House.
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Reserve Bank Governor Adrian Orr expressed concern in August about the situation buyers of recent homes may soon find themselves in, and since then prices have risen rather than fallen.
The two-year fixed rate offered borrowers the option to pay off some of their home loan costs, Sims said.
Reserve Bank of New Zealand Te Pūtea Matua has warned that homeowners are facing rising mortgage rates.
Its data shows that the new two-year average rate rose from 3.47% in June to 4.22% in October.
A $500,000 mortgage over 25 years would cost $1,262 fortnightly at 4.35% and $1,237 at 4.15%.