Bank announces sub 2 percent mortgage rate for new-build homes

PHOTO: The ASB ‘Back My Build’ floating home loan (currently 1.79 percent), is available for new-build homes. Photo credit: Getty Images.

Longer-term fixed interest rates are starting to move up, but for some borrowers the bar on floating interest rates has moved lower.

To support building more homes to boost New Zealand’s housing supply, ASB Bank has announced a floating (variable) mortgage interest rate of 1.79 percent for new-builds. It’s available to owner-occupiers and investors who are either buying a finished new build home (also called ‘turnkey’) or building their own home from scratch.

ASB executive general manager of retail banking Craig Sims said encouraging the supply of new-build homes will help to create a more sustainable housing market.

“Housing supply is a huge issue for the New Zealand economy…that’s why we’re keen to give a leg-up to customers who want to join us in being part of the solution,” Sims said.

Unlike a fixed interest rate, the new build floating rate (currently 1.79 percent) changes according to market conditions. ASB said it’s using funds from the Reserve Bank Funding for Lending Programme, a pool of funds available at the Official Cash Rate for banks to lend.

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