PHOTO: Mortgage Rates. FILE
ASB Slashes Mortgage Rates Again – Is Now the Time to Lock In? 🏡📉
ASB has cut its fixed mortgage rates once again, providing homeowners and buyers with more competitive lending options. This marks the fifth rate drop this year, as banks compete for borrowers amid shifting market conditions.
ASB’s New Fixed Mortgage Rates 🔽
The latest changes include:
✅ Six-month fixed rate: 5.79% (-10 basis points)
✅ Four-year fixed rate: 5.59% (-20 basis points)
✅ Five-year fixed rate: 5.69% (-10 basis points)
At the same time, ASB has lowered its term deposit rates, with reductions ranging between five and 20 basis points, affecting savers who rely on interest income.
Why ASB Is Lowering Rates Again 💰
ASB’s executive general manager of personal banking, Adam Boyd, says more customers are splitting their mortgages across different fixed terms to hedge against market uncertainty.
“We’re seeing a growing number of customers hedging their bets in the current climate, and we’re pleased to be able to offer a range of lending options to suit homeowners’ and homebuyers’ diverse needs,” Boyd said.
What’s Driving the Drop in Mortgage Rates?
💵 OCR Cut: The Reserve Bank of New Zealand (RBNZ) lowered the Official Cash Rate (OCR) by 50 basis points to 3.75% last month, prompting a wave of rate cuts from banks.
📉 Rate Wars Between Banks: Lenders are now competing aggressively, especially in the two- and three-year fixed rate categories, to attract borrowers.
📊 Market Conditions: Many homeowners are looking for stability amid rising living costs and economic uncertainty, leading banks to offer longer-term fixed rates at lower rates.
Are Short-Term Fixes Still the Best Option? 🤔
CoreLogic NZ’s chief property economist, Kelvin Davidson, says recent rate drops could shift borrower behaviour away from short-term fixes and floating rates.
Current mortgage breakdown in New Zealand:
🔹 71% of existing mortgages are fixed but will need to be repriced soon.
🔹 12% of mortgages are currently floating, meaning borrowers are exposed to fluctuating interest rates.
🔹 Only 10% of new borrowers in January chose fixed terms longer than 12 months—the rest opted for floating or short-term fixes.
A Shift Toward Longer Fixed Terms?
📌 Short-term fixes have dominated in recent years, as borrowers tried to ride out peak interest rates.
📌 But with banks offering competitive two- and three-year rates, Davidson suggests borrowers may now start locking in longer terms again.
“The fixation with short-fixes might be about to come to an end,” Davidson said. “We could start to see more borrowers opting for longer-term stability.”
What This Means for Homeowners & Buyers 🏡
📌 If You’re Looking to Refinance: Now might be the time to lock in a longer fixed term at a lower rate, especially if rates continue to drop.
📌 If You’re Buying a Home: Two- and three-year fixed rates could offer the best balance between affordability and flexibility in the current market.
📌 If You Have a Floating Rate: Consider switching to a fixed term before the next RBNZ OCR review on April 9, which could influence future rate movements.
With mortgage rates on the move and competition heating up among banks, it’s essential for borrowers to stay informed and act strategically to get the best possible deal.
SOURCE: 1NEWS