ASB increases interest mortgage rates ahead of Reserve Bank official cash rate announcement

ASB has announced increases to its fixed-term mortgage and term deposit rates ahead of the Reserve Bank's official cash rate announcement on Wednesday. 

ASB's executive general manager of retail banking Craig Sims said despite the increase, interest rates are still at historically low levels. 

"The New Zealand economy is proving robust, and the economic outlook has improved. While interest rates are now increasing, they remain at historically low levels.

"We're mindful that some first home buyers in particular have only ever experienced the current low-rate environment. When we assess a home loan application we use a 'test rate' that is substantially higher than current mortgage rates to give customers the confidence they can continue to make payments if rates increase."

The one-year fixed mortgage rate has one of the highest increases from 2.19 percent to 2.55 percent an increase of 0.36 percent. 

The two-year fixed rate will also see a 0.36 percent increase from 2.59 percent to 2.95 percent. 

The six-month, 18-month, three-year, four-year and five-year rates are all seeing a 0.30 percent increase. 

The six-month rate will increase from 2.99 percent to 3.29 percent. Eighteen month will increase from 2.49 percent to 2.79 percent while the three-year rate will increase from 2.99 percent to 2.95 percent. The four-year rate will increase from 3.39 percent to 3.69 percent and the five-year rate will rise to 3.99 percent up from 3.69 percent. 

There is no change to the housing variable, orbit variable or Back My Build variable rates. 

Sims says homeowners who are concerned about the increase should contact them to discuss their options. 

"We encourage home lending customers to talk to us about their options, which could include spreading mortgage amounts over different terms to give certainty overtime or making extra payments while rates are very low."

Sims says ASB is focused on long-term financial wellbeing for customers which is why they are also changing term deposit rates. 

"In line with this the changes to our Term Deposit rates today will see our most popular six-month term move to 1 percent. 

"We're committed to offering innovative home lending products such as our 1.79 percent  variable Back My Build loan for customers building a new home, and helping customers budget with the comprehensive calculators and tools available on our website.

"Whatever the market conditions, our focus is squarely on offering customers market-leading home lending products and leading customer experiences."

The three-year term deposit fund is seeing the highest increase from 1.40 percent to 1.70 percent. 

The four-year fund is increasing from 1.6 percent to 1.85 and the five-year fund from 1.75 to 2 percent. The six-month fund will also see an increase from 0.80 percent to 1 percent, while the two-year fund is seeing a slight increase from 1.3 to 1.4 percent. 

The Reserve Bank is set to reveal any changes to the official cash rate at 2pm today.