ASB Housing Confidence survey


AS the only major retail bank in Aotearoa charging over 7 percent for its two-year fixed mortgages, ASB’s recent move may set a precedent for others, according to a prominent economist. Despite the Reserve Bank/Te Pūtea Matua having halted official cash rate (OCR) increases since May, banks have continued to raise their home loan rates. Brad Olsen, CEO and chief economist at Infometrics, explained that ASB’s decision reflects the challenges faced by retail banks due to elevated international borrowing costs, which are now being passed on to consumers.

Olsen noted that whether other banks follow ASB’s lead depends on their willingness to balance protecting profit margins against attracting more customers. Some banks may attempt to absorb a portion of the increased wholesale rates to maintain competitive mortgage rates, but there remains a considerable disparity in one-year fixed rates among the larger banks.

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What actions are the major banks taking?

Kiwibank currently boasts the lowest one-year fixed rate among the prominent banks, with ANZ offering the highest rate in this category.

ASB has recently implemented a series of adjustments to its mortgage rates, with its two-year fixed rate reaching 7.05 percent, marking the highest point in 14 years. Furthermore, ASB raised its one-year, four-year, and five-year rates by increments ranging from 0.16 to 0.20 percent. It’s worth noting that ASB does not offer “special” rates like some other banks.

In August, the Australian-owned bank reported a profit of $1.5 billion for the fiscal year ending in June, representing a 9 percent increase from the previous year. David Cunningham, the CEO of mortgage brokers Squirrel, pointed out that the Reserve Bank has indicated on two occasions that New Zealand has likely reached the peak of the interest rate cycle. He mentioned that the fact that longer-term mortgage rates, such as the five-year rate, are lower than short-term rates suggests that the market anticipates the OCR to begin decreasing in 2024.

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Despite this, banks have been slow to raise their term deposit rates for savers, which has contributed to an increase in their profit margins. Currently, banks’ retail profit margins are at approximately 2.4 percent, marking a record high after a significant rise since early last year.

Here are the one-year fixed-term home loan rates for major banks:

  • Kiwibank: 6.99 percent
  • BNZ: 7.19 percent
  • Westpac: 7.25 percent
  • ASB: 7.45 percent
  • ANZ: 7.69 percent