Moves complete main banks’ realignment of mortgage rates in 2021
ASB, the second-largest mortgage lender in New Zealand, has matched its rivals with three increases for its longer-term rates.
ASB increased its home loan rates for three-, four-, and five-year fixed terms to 2.99%, 3.39%, and 3.69%, respectively. Meanwhile, its rates for six- and 18-month terms and two-year terms remained at 2.99%, 2.49%, and 2.59%, respectively.
The new home loan rates came after ASB’s latest quarterly economic predictions, stating that house prices are unlikely to fall in the next year or so as New Zealand’s economy recovers from the impacts of the COVID-19 pandemic.
However, ASB chief economist Nick Tuffley expects price growth to slow down, stating: “We expect the pace of sales activity and price appreciation to slow this year. Government tax changes will slow investor demand, adding to the headwinds from stretched affordability and a levelling off in mortgage rate declines.
“The growing headwinds that have picked up over the past year, including the government tax changes, slow investor demand, and we may also start to see some natural slow down with house prices very high relative to incomes, and mortgage rates not likely to fall any lower.”
ASB’s updated home loan rates completed New Zealand main banks’ realignment of mortgage rates in 2021, which ASB started in April when it cut its one-year fixed rate by 40 basis points to 2.25%, according to Interest.co.nz.
Early this month, Kiwibank also tried to outdo its competitors by launching its lowest-ever home loan rate of 2.19% p.a. fixed for one year, down by 16 basis points from the previous one-year special of 2.35%.
However, like ASB, Kiwibank increased its three-, four-, and five-year fixed-term rates to 2.99%, 3.39%, and 3.69%, respectively.
