ASB kicks off 2013 mortgage war

RICHARD MEADOWS
Last updated 09:44 21/01/2013
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GOOD NEWS: The 2013 mortgage war kicks off as ASB cuts its long-term rates.

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ASB Bank has cut its long-term fixed mortgage rates, marking the first signs of life returning to the aggressive home loan market this year.

The bank shaved 15-25 basis points off its three, four and five-year terms, while also ending its special two-year rate.

Its three year rate is now 5.75 per cent, on par with the Co-Operative Bank and AMP, but behind market leader Kiwibank's 5.65 per cent.

ASB also cut its four-year rate 15 basis points to the market-leading 5.95 per cent.

Its closest competitors are Westpac, the Co-operative Bank and Kiwibank, all advertising 5.99 per cent rates.

ASB's five-year rate was cut to 6.25 per cent, well behind the sub-six per cent rates offered by Westpac, SBS/HBS, and Kiwibank.

Westpac ended its special short-term rates last week, bringing them in line with other major lenders.

Reserve Bank statistics show most home owners with fixed mortgages are opting for shorter terms of less than two years.

However, the changes to longer term rates provide an indication of where the banks think interest rates are heading.

The Reserve Bank has kept its official cash rate - which influences short-term mortgage rates - on hold at 2.5 per cent for many months. Economists expect it to remain unchanged until early 2014.

Leading investment strategists have forecast a climate of rates remaining lower for longer over the next decade.

The latest standard for residential home loans can be compared here.

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- BusinessDay.co.nz

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