ASB cuts rates for high LVR borrowers
ASB Bank will no longer charge high LVR borrowers a higher interest rate, promising to offer the same price "irrespective of equity levels".
Thursday, July 16th 2020, 10:09AM
The big four bank is moving to a single fixed home loan card. It means investors, first-home buyers, and investors will be put on the same rates, effective immediately.
The lender said the move would put "thousands of dollars back into the pockets of first home buyers with less than 20% equity".
ASB previously offered higher rates to those borrowing more than 80% LVR. It will now offer "all customers to access lower rates, irrespective of their equity levels", using its old special rate.
The lender claims to be one of the first lenders in New Zealand to move to a single card for all borrowers.
However, the bank will continue to charge those with less than 20% equity a "low equity margin", incurring extra cost for high LVR borrowers.
The bank's executive general manager for retail banking, Craig Sims, said the single card would help more Kiwis into home ownership.
He said the 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".
Sims added: “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."
ASB's changes mean Go Home Loans/AIA will also adopt the new policy.
The cuts for high LVR loans will come as a major boost to the property market, which has benefited from record-low interest rates and the end of LVR restrictions in the wake of Covid-19.
Glen McLeod of Edge Mortgages welcomed the decision and said the old system was "a sad penalty for clients that are already struggling to get a deposit". "Hopefully all the others will follow suit," he said.
NZFSG's Bruce Patten said the ASB decision was "great news", but said other banks already offered the same. NZFSG said Westpac allow a special plus equity margin, BNZ's standard rate waives a low equity margin, and ANZ discounts rates and fees.
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