The bank cuts long-term mortgage rates, but lifts short-term rates
A major New Zealand bank has reduced its five-year mortgage rate lower than its one-year option, an unusual move that signals interest hikes may slow soon.
ASB’s interest rate offerings have been updated for the start of 2023, with the bank’s short-term rates getting bumped while the longer-term options were dropped.
ASB has raised its six-month fixed rate by 34 basis points to 6.84%, which was the same as its one-year fixed rate which lifted 30 basis points to 6.84%, Newshub reported.
Also increased was the bank’s 18-month and two-year fixed rates which were up 15 and five basis points, respectively, to 6.79%.
Meanwhile, the bank’s three-year mortgage rate was cut by 15 basis points, and its four and five-year rates were slashed by 40 and 50 basis points, respectively.
The changes meant the bank’s three-year rate was now 6.69%, its four-year rate 6.59%, and its five-year rate 6.49%.
ASB is the only major NZ bank to offer a lower rate for its five-year option compared with its six-month option.
Brad Olsen, Infometrics principal economist, said the increases to the short-term rates are likely in anticipation of the Reserve Bank lifting the OCR in February to curb inflation, Newshub reported.
“There’s still an expectation, and a pretty strong expectation, the Reserve Bank is going to have to continue to raise interest rates in the first few months of this year,” Olsen said.
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