Saturday, May 28, 2022

ASB Bank drops first-home buyer mortgage rates

ASB Bank

Over recent years, people with less than 20 per cent equity have not been able to access bank “specials”, which are sometimes 50 basis points or more cheaper

First-home buyers without a 20 per cent deposit will no longer get less competitive interest rates at ASB (Auckland Savings Bank).

Over recent years, people with less than 20 per cent equity have not been able to access bank “specials”, which are sometimes 50 basis points or more cheaper.

But ASB said on Thursday it was moving away from having two home loan rate cards, and would offer the same rates to all customers.

A low-equity margin would still apply, which can add between 0.3 per cent and 1.5 per cent to the advertised rate.

The Reserve Bank has lifted its loan-to-value restrictions which require banks to limit their lending to borrowers with smaller deposits.

But banks are still being cautious with their new lending and low-deposit lending dropped from $707 million in May last year to $515m this year.

Retail banking Craig Sims said the move was intended to help first-home buyers.

The home ownership journey is an incredibly exciting one, but we know it can also be stressful for many of our customers. The move to a single rate card is going to help make it simpler and easier, he said.

More importantly however, this change is going to save our low equity first home buyers thousands of dollars each over the course of their home loan repayments, which will make a significant difference to their financial wellbeing, he said.

Sims said, this is going to help our first-home buyers in particular, as they often have lower equity, and so face higher rates. This will give them a leg up and hopefully help more New Zealanders into home ownership.

Lex Thornton, general manager for banking advice centres, said it would mean all borrowers could access special rates.

Broker Glen McLeod, of Edge Mortgages, said it would make a difference to first-home buyers.

But he said banks generally were only offering loans to buyers with less than 20 per cent deposit if they were already existing customers. Banks wanted the security of being able to look back through their full records and get a clear idea of what they were like, he said.

But Thornton said ASB was “open for business” for new and existing customers.

McLeod said while the “post-lockdown honeymoon” was over, there was a sense of buyers waiting to see what happened next. He said he was as busy as he had ever been. “I had 14 appointments in one day yesterday.”

A spokesman for ANZ said it was continually reviewing its rates. Kiwibank home loan product manager Richard McLay said the bank had received more interest from first-home buyers since the Reserve Bank removed loan-to-value restrictions. “The structure of our rate cards has made it easy for our customers to understand the rate they will receive.”


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