ASB is offering all its home loan 'specials' to buyers who don't have at least a 20% deposit.
They have changed all their 'Standard' rates to their 'Special' rates.
ASB is the first of the main banks in the market to have a single rate card offer. Challenger banks Heartland, Co-operative Bank and HSBC already offer this, as well as community-targeted banks Kookmin and Bank of Baroda.
ASB says "this change is going to save our low equity first home buyers thousands of dollars each over the course of their home loan repayments".
This doesn't change the relative offers for borrowers who have at least 20% equity, but it will mean lower interest rates for those who don't.
It will save those borrowers about -50 bps.
While the rate card difference has been shifted lower, remember that ASB still has low equity margins that will still apply.
And banks are now more focused on income security when agreeing to fund a new home loan.
Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at this time. Those marked ♦ still have Standard rates for borrowers with less than 80% equity and those Standard rates are higher than rates in this table.
| Fixed, below 80% LVR | 6 mths | 1 yr | 18 mth | 2 yrs | 3 yrs | 4 yrs | 5 yrs |
| as at July 16, 2020 | % | % | % | % | % | % | % |
| ANZ ♦ | 3.55 | 2.55 | 2.65 | 2.69 | 2.79 | 4.15 | 4.25 |
 |
3.55 | 2.69 | 2.65 | 2.69 | 2.99 | 3.09 | 3.19 |
♦ |
4.29 | 2.55 | 2.69 | 2.69 | 2.99 | 2.99 | 2.99 |
♦ |
3.55 | 2.55 | 2.79 | 3.25 | 3.45 | 3.55 | |
♦ |
4.79 | 2.55 | 4.25 | 2.69 | 2.79 | 2.99 | 2.99 |
| Bank of China ♦ | 3.45 | 2.55 | 2.65 | 2.65 | 2.75 | 2.85 | 2.95 |
| China Construction Bank ♦ | 4.70 | 2.65 | 2.65 | 2.65 | 2.80 | 2.89 | 2.99 |
| Co-operative Bank | 2.69 | 2.69 | 2.75 | 2.75 | 2.99 | 3.19 | 3.29 |
| Heartland Bank | 2.89 | 2.97 | 3.39 | ||||
| HSBC | 2.95 | 2.60 | 2.65 | 2.65 | 2.80 | 2.89 | 2.99 |
| ICBC ♦ | 2.95 | 2.58 | 2.79 | 2.68 | 2.79 | 2.99 | 3.45 |
♦ |
3.39 | 2.79 | 2.79 | 2.69 | 2.99 | 3.09 | 3.19 |
[incl Price Match Promise] ♦ |
2.99 | 2.55 | 2.65 | 2.69 | 2.79 | 2.99 | 2.99 |
In addition to the above table, BNZ has a unique fixed seven year rate of 5.20%.
Fixed mortgage rates
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35 Comments
Irrespective of whether one thinks it is a good time or bad time for FHB to buy, it is pleasing to see a level playing field.
I have been posting for the past couple of weeks that bank lending has been disadvantaging FHB with a high LVR premium over carded rates while those with a slightly lower LVR (mainly investors) are advantaged with a special rate below carded rate. In practice this meant most FHB were paying rates 1% above investors.
And before anyone starts spluttering in their morning coffee about lending in gay abound;
- Banks have become a lot, lot tighter on both one's income security and job security such as casual relief teachers without confirmed hours are being downgraded or ignored, employment with risky companies also downgraded
- they are seeing receipt of the wage subsidy as a red flag,
- the 6.2% to 7% interest rate test is still being applied, and
- they are critically looking at valuations and considering a range of factors.
Personally, cashed up and ready, but still sitting, watching and waiting. Probably sound advice for FHB also.
Glad we took the plunge when we did 3 years ago, it was hard back then as we were a single income household and the amendments to responsible lending code had literally just come into play. Couldn't imagine trying to do the same now, even as a dual income household.
Good grief.
Low equity premiums are fair enough.
"Leveling the playing field" is a rubbish equality argument.
Lending is all about managing credit risk.
With less equity you are, objectively, a higher credit risk and that risk should be priced accordingly
As is the case if you have casual work arrangements (i.e. relief teachers).
You're a higher credit risk due to less certain serviceability.
I appreciate, with all the stimulus and rank distortion, that it's easy to forget that a Bank's business is managing credit risk. But FYI, that's the beginning and end of their business model.
There is no valid 'fairness' argument here.
Nope, I just posted another comment above at the same time you posted this - you should check it out.
But, sure, try to make managing credit risk a violin-playing exercise.
If you're really, truly, worried about FHBs then the best thing for them would be lower prices.
Not more, but ever-so-slightly cheaper, debt.
If you don't agree then, to borrow a phrase; rather sad that you feel that way.
Great to hear Logan
This move clearly removes the premium you were paying although you meet all the banks other risk criteria.
Your situation and outline of your proposed action compared to other properties (in the BOP I think) as you have previously posted makes sense. The bank - in their vested interest - would not be lending to you if they thought you were of a significant risk.
As long as you can service the mortgage and have income security - which your previous posts indicate that you have - you have little to be concerned about short term fluctuations the market which at the moment are at a heightened likelihood.
You are getting on with life and providing long term social and financial security for your family, as well as the intrinsic value of homeownership.
You have your self sorted, are fully aware of the risks and have the initiative to get on with life unlike a number on this site who have been by their own admission been posting for five years of a impending bubble burst. Unlike the estimated120,000 FHB over the past three year, I am sure that these knockers will be in the same position paying off their landlord’s mortgage - something In the future they will come to regret.
Thanks mate.
Yep spent a lot of time on this site trying to figure out what is best for us. We went ahead with the new build after securing finance. Currently going through the deposit stage now and hopefully unconditional in the next week or two.
Thanks for the advice throughout!
you can no longer trust the data being reported out of the USA
Hospitals now have to send their data on coronavirus patients to the Trump administration instead of the CDC. Michael Caputo of the Department of Health and Human Services confirmed the change, saying the CDC’s system for gathering hospital data is inadequate, and the administration will implement a “new faster and complete data system” that the CDC will participate in but no longer control.
Seems like this is completely mispricing the risk.
I always had a problem with paying the same rate as others when my mortgage was ~10% LVR... considerably less risk to the bank than a 90% LVR loan.
This just promotes people to lever up.
Seems like a step toward the American housing debacle that started in the late 90s and ended in 2008 .... all premised on the assumption that house prices only go up.
Hi David, you say that Co-Op doesnt have 'standard rates' for loans over 80%. According to their site they do (and your mortgage table) https://www.co-operativebank.co.nz/rates. Their standard card also applies to investor loans and is 0.50% higher.
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