ASB’s 18-month rate comes down to 4.45%, just lower than ANZ, BNZ, and Westpac’s 4.49%.
Its two-year rate has dropped to 4.49%, on par with ANZ and Westpac, but lower than BNZ’s 4.65% rate and Kiwibank’s 4.69%.
ASB has cut its three-year rate to 4.79%, its four-year rate to 5.09% and its five-year rate to 5.15%. ANZ’s three-year rate, for comparison, is also 4.79%, while BNZ and Westpac’s are 4.85% and Kiwibank’s is 4.99%.
It comes a week and a half after the Reserve Bank of New Zealand slashed the Official Cash Rate by 50 basis points (bp) to 2.5%.
ASB’s 18-month home loan rate comes down to 4.45%, just lower than ANZ, BNZ, and Westpac’s 4.49%.
The committee for deciding the cut said it remained open to further reductions in the OCR, as required for inflation to settle sustainably near the 2% target mid-point in the medium term.
Kelvin Davidson, economist for property sector analyst Cotality, said at the time: “It’s taking a lot of work to get this economy turning around and today’s decision will hopefully be the shock treatment required to get everyone back into gear”.
The OCR has now fallen 300bps since August last year, when it was 5.25%.
The rate-cutting merry-go-round was in full swing before the OCR announcement.
The five major banks lowered rates by as much as 40bps across short and long-term loans.
ANZ, ASB, Westpac, BNZ and Kiwibank all dropped their one-year rates to 4.49%.
ASB chief economist Nick Tuffley said the Reserve Bank’s decision signalled that the likelihood of inflation pressures being weaker than previously anticipated carried more weight than waiting to see how quickly the economy rebounds, and what ripple effects come from the current spike in inflation.
“Our view is the downsides from the 50 basis point cut are small, given the RBNZ’s August forecasts showed a strong likelihood the OCR would get there by year end anyway,” he said.
“We expect one further 25 basis point cut will help underwrite economic recovery sufficiently.
“But if it doesn’t, the RBNZ could potentially cut even further,” ASB said.
Raphael Franks is an Auckland-based reporter who covers business, breaking news and local stories from Tāmaki Makaurau. He joined the Herald as a Te Rito cadet in 2022.
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