WELLINGTON (CU)_New Zealand’s second largest mortgage lender ASB’s latest quarterly economic projections have suggested that as the economy continues to recover from the pandemic, house price are unlikely to fall throughout the next year, although price growth is expected to slow down.
“We expect the pace of sales activity and price appreciation to slow this year,” ASB chief economist Nick Tuffley said. “The growing headwinds that have picked up over the past year, including the government tax changes, slow investor demand, and we may also start to see some natural slow down with house prices very high relative to incomes, and mortgage rates not likely to fall any lower.”
Accordingly, the bank has now decided to match its rivals in terms of home loan rates, as rates for fixed terms of three, four and five years were increased by 2.99 per cent, 3.39 per cent and 3.69 per cent respectively. However, there will be no changes in the bank’s rates for six-month, 18-month and two-year terms, which currently stand at 2.99 per cent, 2.49 per cent, and 2.59per cent, respectively.
A couple of months ago, ASB slashed its rate for a fixed term of one year by 40 basis points to 2.25 per cent. This was followed by Kiwibank, which attempted to outdo its competitors by bringing down its home loan rate for one year by 16 basis points to the lowest-ever rate of to 2.19 per cent.
However, later it decided to increase its fixed term rates for three, four and five years to 2.99 per cent, 3.39 per cent, and 3.69 per cent, respectively. Accordingly, ASB’s recent move to match its rivals completed the realignment of mortgage rates of New Zealand’s main banks for 2021.
