ASB is launching a home loan for new construction with a variable interest rate of 1.79%, using cheap financing from RBNZ. Plus, it offers a cash incentive if the new home has a high energy efficiency rating.
ASB offers a 1.79% adjustable rate mortgage on loans used to purchase newly constructed homes.
This rate will be available for up to three years from the moment the customer makes their first direct debit. A variable rate means that customers are also free to make lump sum payments or fix their rate at any time.
They finance it from the Reserve Bank of Loan financing program, which follows previous statements by ASB that money from this program will be used for special purposes.
ASB’s standard variable rate is 4.45% and very similar to its main competitors, with the exception of Kiwibank which is 3.40%.
ASB’s executive managing director of retail banking, Craig Sims, says the bank wants to help create “a more sustainable housing market by solving housing supply issues.”
“The supply of housing is a major problem for the New Zealand economy. That’s why we want to give a head start to customers who want to join us to be part of the solution. We have deliberately chosen to make the offering accessible to homeowners and investors in recognition of the role investors can play in making new, high quality homes available to Kiwi families.
In addition, ASB entices borrowers with cash back if they incorporate energy efficient design into their construction.
ASB has partnered with the New Zealand Green Building Council to encourage Back My Build homes to incorporate sustainability principles and will reimburse clients $ 2,000 if they can prove their intention to build a six Homestar (or more) home.
Sims says, “The ASB Back My Build Variable Rate is unique and we are confident that the special market leading rate associated with the Homestar rebate will make a significant difference to first-time buyers in particular, while helping to create a housing market at longer term. “
The RBNZ loan financing program allows eligible banks to borrow directly from the central bank at the official cash rate (OCR), which is currently 0.25%. The borrowing rate will adjust over the duration of the transaction if the OCR changes, either up or down.
This is a program that started in December 2020 and runs until June 6, 2022 for initial allocations, and until December 6, 2022 for additional allocations.
ASB withdrew $ 500 million as part of this program on March 12. So, he had almost 10 weeks of super low cost finance profit before launching this new offering, and it will be many more weeks before physical levies start using this low cost finance.