ASB and Westpac Trim Home Loan Rates, Expectations of No Changes for Upcoming RBNZ Review

Date Published: 8 April 2024

Key Facts

• ASB has made minor cuts to some home loan rates in response to Westpac’s targeted cut last Tuesday.
• The adjustment comes as the primary real estate selling season begins to wane, implying a potential uptick in market shares.
• Both ASB and Westpac have reduced their two-year fixed rates to 6.75% and their five-year fixed rates to 6.39%.
• The main banks last provided a two-year fixed rate of 6.75% in July 2023, and a five-year rate of 6.39% in February 2024.
• Neither Westpac nor ASB have made changes to their term deposit rates to match the mortgage rate changes.
• No changes to the RBNZ’s OCR are expected this week, regardless of a planned review on Wednesday.
• There are three -25 bps cuts anticipated in the finanical markets in 2024 — in August, October, and November.

Article Summary

ASB Bank has reduced some of its home loan rates, aligning itself with a recent similar move made by Westpac bank. This change is seen as a response to the conclusion of the primary real estate selling season. The step is not a drastic one, but rather marks an on-going minor down-trending of home loan rates.

Both banks have lowered their two-year and five-year fixed rates. Their two-year fixed rate is now 6.75%, which was last offered by a major bank in mid-July 2023. They offer a five-year fixed rate at 6.39% currently, a level that banks last offered in mid-February 2024. At the moment, this five-year rate is the lowest offered by any bank.

Whilst their mortgage rates have seen changes, the banks have not altered their term deposit rates to match them. Furthermore, a change in the Reserve Bank of New Zealand’s Official Cash Rate (OCR) is not expected in the upcoming review this week. Financial markets anticipate three rate cuts in 2024, to happen in August, October, and November respectively.

In conclusion, potential home loan customers are advised to negotiate and shop around as most banks would discount their advertised home loan rates for borrowers with strong financial profiles. Additionally, there are calculators available to help understand the altered home loan rates as well as to analyse term rates.

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