ASB reduces fixed term mortgage and deposit rates amid economic shifts
ASB, the second-largest mortgage lender in New Zealand, has recently lowered several of its fixed term mortgage rates and term deposit rates, marking a significant adjustment in response to the changing economic landscape.
Specifically, the bank has reduced its six-month home loan rate by 10 basis points to 5.79%, its four-year rate by 20 basis points to 5.59%, and its five-year rates by 10 basis points to 5.69%, 1News and RNZ reported.
ASB’s Strategic financial management
Adam Boyd (pictured), ASB’s executive general manager of personal banking, commented on the rate changes.
“We’re seeing a growing number of customers splitting their mortgages across different terms to hedge their bets in the current climate, and we’re pleased to be able to offer a range of lending options to suit homeowners’ and home buyers’ diverse needs,” Boyd said.
This marks the fifth time this year that ASB has reduced its fixed mortgage rates, reflecting a proactive approach to financial management amid fluctuating market conditions.
Implications for savers
Alongside mortgage rate cuts, ASB has also adjusted some of its term deposit rates, with decreases ranging between five and 20 basis points.
These changes come in the wake of the Reserve Bank’s decision to lower the OCR by 50 basis points to 3.75%, influencing other financial institutions to reevaluate their own rates.
Market trends and predictions
The rate adjustments occur amidst a landscape where other banks have also been actively modifying their rates, often referred to as “rate wars,” 1News reported.
“Around 71% of NZ’s existing mortgages by value are currently fixed but due to reprice onto a new mortgage rate soon, and another 12% is floating,” said Kelvin Davidson, chief property economist at CoreLogic NZ.
“With rate wars recently emerging among lenders offering lower two to three year fixed rates, we could start to see a shift back towards them pretty shortly.”
Evolving borrower preferences
Historically, a significant portion of borrowers preferred shorter-term fixed rates or floating rates. However, with recent economic developments and the availability of more favourable rates, there appears to be a shift towards longer-term fixed rates as borrowers seek to lock in lower rates amid uncertain economic times.
