ASB has joined the fears of the last round of mortgage lending – released its fixed rate in a year to match the record 3.95 percent that ANZ offers.
ASB's one-year fixed-rate home loan (special) has decreased from 4.19 percent per year to 3.9 percent, while the standard interest rate for the same maturity has decreased from 4.59 percent to 4.45 percent.
The reduced rate is available for new and existing home loans from tomorrow.
Yesterday, the bank lowered NZ's two-year fixed rate to a "historical" 3.99 percent when it came back in a growing mortgage war between the country's lender.
ANZ – the country's largest bank – last week offered the lowest rate of a major bank since just after World War II with a fixed season of 3.95 percent.
This followed up by offering a 3000 cash offer to customers who took out a new home loan and undertook to hold their mortgage with ANZ for three years.
Westpac has also announced that it will match ANZ's offer of one year fixed interest rate of 3.95 percent.
Loan Market Adviser Bruce Patten says that spring is traditionally the time when banks released interest rates, but the current low interest rates showed that they had a fight for the customers.
"This means that banks are trying to stimulate operations so that they provide a little margin to get a crack on the small lending volume," he said.
"It's good for the consumer because we have some very low prices."
The banks' new low interest rates come after a decade of rising increases in Auckland house prices drove the values to insurmountable levels that locked many people home.
The subsequent decline in demand and new state restrictions aimed at investors led prices and sales volumes to plateau and remained virtually unchanged throughout the year.
October, however, had raised prices and the number of houses sold, says Peter Thompson, chief of Barfoot and Thompson.
These signs of a spring break in combination with the banks' new low prices led some pundits to question whether there would now be a rush of new buyers on the market, which would push up prices again.
The low specials offered by ANZ, BNZ and Westpac are only available to homeowners with a deposit or 20 percent of their home shares.
However, ANZ's 3000-thousand cashback offer is available to customers with less than 20 percent equity in their homes, according to the Loan Market Patten.
Are you going to refinance?
• To check if it is worth breaking the contract on your current home loan to capitalize on the new low interest rates, you must call your mortgage broker or bank
• They will tell you how much your fee is to end your mortgage loan early
• You must then calculate if the fee will increase to more than the money you save from reduced interest payments. But beware, if the fee is large, you may need to add it to your home loan and then pay interest on it as well
• Mortgage Adviser Bruce Patten says that most will find that they do not save money or lose money if they violate their contract. But he said it was worth calling your broker or lender because the odd person will be able to save money