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ASB Lowers Mortgage Lending Rates

Fuseworks Media
Fuseworks Media

Wellington, May 9 NZPA - ASB Bank today lowered some its key fixed mortgage lending rates after wholesale rates plunged yesterday following shock jobs data.

ASB, owned by the Commonwealth Bank of Australia, dropped its two-year lending rate to 9.40 percent from 9.70 percent and its three-year rate to 9.50 percent from 9.65 percent.

Yesterday, wholesale yields had their biggest fall on the money market for over two years after Statistics New Zealand reported 29,000 jobs were lost in the March quarter. Economists had forecast no change.

The two-year swaps market rallied to as low as 7.73 percent from 7.97 percent at the start of the day, while 90-day bank bill yields fell to 8.63 percent from 8.77.

The jobs news caused frenetic trading, particular in the two and five year swaps market from which banks like ASB fund their mortgage lending.

Economists said the jobs data dramatically pulled forward the prospects of an interest rate cut. The market has already priced in 17-18 basis points of a 25 point rate cut.

They now expect a rate cut in July, rather than late this year, or early next year.

This time last week, ANZ and National Bank announced they were increasing their variable home lending rate by 25 basis points to 10.95 percent.

In contrast, late last month, state-owned Kiwibank cut its two-year lending rate to 9.29 percent from 9.60 for borrowers with at least 20 percent equity in their purchase.

Mortgage lending rates had been rising as banks faced higher borrowing rates offshore, as markets adjust to the sub-prime credit problems.

Banks have also been lifting deposit rates to attract cheaper domestic funding, with rates of 8 percent and 9 percent on offer.

NZPA WGT sml cw

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