What on Earth is ASB Bank playing at?
Filed under: Cost of living, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ, Retirement, Pensions and Kiwisaver
So, the Official Cash rate in New Zealand is at an all time low, and as of a few weeks ago was still dropping. There is no sign that the Reserve Bank of New Zealand is about to start raising the interest rate again soon.
So why would ASB bank raise their 3 and 5 year fixed interest rates by 0.5% yesterday???
It’s not as if they have ever passed anywhere near the full interest rate drops onto its customers. When I first took out my mortgage with them, there was about a 1% difference between the OCR at the time, and the rate I was paying. With the discount I got, it was even less than that. Currently – that 5-year rate gives a whopping 3.25% difference. Talk about creaming the situation.
It looks like the other banks are following suit.
So what does this mean?
It is not good news for anyone looking to buy a house. Not only does it look like the banks are refusing to allow us to have sensible interest rates, but we also now need 20% deposits. There just are not many people who can buy under those circumstances. A lot of UK migrants would be OK – assuming that they managed to get any money out of their UK property. (I am really grateful right now that my parents took a huge leap of faith in our emigration plans and sold their house when we emigrated here, which means they do not have to sell up now in an horrendous market and can just pack up and move).
It also means more uncertainty for people trying to organise budgets and living costs. With this move, it makes it even harder to work out whether to break a fixed rate, re-fix or stay floating. When banks put up their long term fixed rates – it tends to suggest that they think the OCR will start gong up. But will it? No one knows, and its getting harder and harder to make sensible decisions about your mortgage rates and to budget for them.
I’m really disappointed in ASB, especially as I found out yesterday that they will no longer negotiate on rates for their revolving credit mortgages. As they also no longer negotiate on their bank fees – I wonder why the still employ people in a “negotiations” department.
Related posts:
- Now even our MP’s want to know why the banks are ripping us off.
- ASB Interest rate changes – humph!
- Will New Zealand’s interest rates fall again this week?
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