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ASB drops mortgage rates to new low as 'mortage wars' continue

ASB has lowered its two-year mortgage rate today as competition for mortgage spending among banks continues to heat up.

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In general, about a third have gone interest only, another third have deferred their payments and the final third have gone for other assistance. Source: 1 NEWS

Westpac and TSB yesterday cut their one-year fixed term rate to 2.79 per cent, in response to ANZ doing the same earlier this week.

Now, ASB has taken it a step further, offering a two-year rate of 2.69 per cent.

The banks are trying to attract new lending business after Reserve Bank Deputy Governor Geoff Bascand commented on Monday that the central bank's Covid-19 bond-buying efforts had been effective at reducing wholesale interest rates.

However, he also said the measures were not translating quickly enough into lower mortgage rates.

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The six-month repayment break for people and businesses affected by coronavirus was confirmed earlier this week. Source: 1 NEWS

The rate drops also come as some in the financial sector speculate that New Zealand could see a negative Official Cash Rate in coming months.

Craig Sims, ASB's general manager of retail banking, said the reduced rate would be welcome news for homeowners, and first-home buyers.

"This new rate is incredibly competitive, and we’re proud to be doing our part to support our customers on their home ownership journey," he said.

"We hope this will help them manage their home loans, or enable others to be in a position to get into their first home."

The new interest rate come into effect tomorrow. It is not known how long it will be in place.

Following the ASB announcement today, BNZ also lowered their 1 year rate to 2.79 per cent, as well as setting all of their other fixed rates at 2.99 per cent as of May 25.