ASB Homeowners’ Floating Mortgage Rate 40 Year Low

Friday, 4 September 2009, 2:46 pm
Press Release: ASB Bank

4 September 2009
Media statement

ASB Reduces Homeowners’ Floating Mortgage Rate To 40 Year Low

Changing cost of funds prompts major overhaul of interest rates

ASB has reduced its floating home mortgage rate by 0.65 percent to a market leading rate of 5.75 percent, its lowest floating rate in more than 40 years.

This bold move by ASB means that a customer with a $200,000, 20-year floating rate mortgage will in future be paying $75 a month less.

At the same time, ASB has cut 0.3 percent from its business and rural base rates, bringing the business base rate down to 10.55 percent and the rural base rate to 7.6 percent.

These new interest rates come into effect as from tomorrow for new loans, and on 28 September for existing floating and base rate loans.

“This is our lowest home loan floating interest rate since December 1967, the year that decimal currency was first introduced in New Zealand,” said Ian Park, Chief Executive Retail Banking.

The Bank’s range of fixed term home lending rates have also been fine tuned, and some short term deposit rates lowered.

“ASB’s new lending rates have been rebalanced to reflect our cost of funds and the level of risk associated with each lending category,” said Mr Park.

“Our new interest rate structure reflects the changing cost of offshore funds, which we rely on to supplement the funds our local depositors entrust us with. Together these deposits cover the amount we are lending out to our customers.

“Whilst we have seen an easing in the cost of shorter term offshore funding rates, the cost of longer term funding is still high. There is also significant competition in the New Zealand deposit market, which is pushing these rates higher than they would otherwise be.

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“This has led us to take the major step of overhauling all of our home lending and a small number of our short term deposit rates. We want to ensure our customers receive the maximum benefit possible from the lower rate structure the current market conditions are driving.”

The Bank has kept its 6 month fixed home lending rate at 5.50 percent.

Its 12 month, 18 month and 2 year fixed rates have increased by 0.2 percent to 5.70 percent, 6.30 percent and 6.75 percent.

The 3, 4 and 5 year fixed rates have increased by 0.3 percent to 7.75 percent, 8.25 percent and 8.6 percent.

ENDS

ASB Bank

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