ASB drops rates on popular home loans; what it mean for homeowners

ASB has reduced four key fixed mortgage rates, bringing them in line with cuts made by other major New Zealand banks. The six-month fixed home loan rate dropped 16 basis points, from 5.45 per cent to 5.29 per cent. The one-year fixed rate fell 6 bps to 4.89 per cent, now matching rates offered by BNZ, Westpac, and Kiwibank.

Three-year and four-year rates also fell by 6bps and 10bps, to 5.09 per cent and 5.49 per cent, respectively. The bank is also lowering some term deposit rates by 5 to 20 bps.

ASB’s executive general manager for personal banking, Adam Boyd, said the move would support both current mortgage holders and new buyers.


He noted that the one-year rate is now 2.5 per cent lower than 18 months ago; if you have a $500,000 loan, that translates to a savings of $12,500 per year.

“We know many New Zealanders are looking to refix or become homeowners, and we’re pleased to support them with lower rates,” Boyd said.

This follows recent cuts by BNZ, which trimmed its six-month rate to 5.29 per cent and its one-year rate to 4.89 per cent.

The wave of cuts comes after the Reserve Bank lowered the Official Cash Rate (OCR) by 25 bps to 3.25 per cent in May, its third consecutive cut.

The OCR has now dropped 225 bps since August last year. Economists expect further reductions this year, possibly down to 2.75 per cent or even 2.5 per cent by December.

The Reserve Bank will make its next OCR decision on July 9.

FAQs: Understanding the ASB Mortgage Rate Cuts

What is a 'fixed mortgage rate'?

A fixed mortgage rate means your interest rate stays the same for a set period (e.g., 6 months, 1 year). This protects you from rate increases during that time.

What does a 'basis point' mean?

One basis point (bps) = 0.01 per cent. So, a cut of 16 bps means the rate dropped by 0.16 per cent.

Why are banks cutting interest rates now?

The Reserve Bank of New Zealand (RBNZ) has cut the Official Cash Rate (OCR) to support the economy. Banks usually reduce mortgage rates when the OCR drops to make borrowing cheaper.

How much will I actually save?

If you have a $500,000 loan, a 2.5% lower interest rate (compared to 18 months ago) means you’ll save about $12,500 per year on interest.