ASB Bank is firing both barrels at other big banks in the fixed mortgage price war, offering 6.95 per cent for two years, but the Bank of New Zealand is firing back with a new 6.9 per cent rate.
ASB is also heavily undercutting all the big banks on the one-yearfixed term, offering 6.95 per cent, which banking sources said was likely to be at paper-thin profit margins.
The ASB's one-year fixed rate is well below any other big bank, and a whopping discount to the 7.75 per cent for one-year fixed being charged by ANZ Bank and Westpac.
ASB trimmed its two-year fixed term rate to 6.95 per cent late last week, down from 7.75 per cent a few weeks ago, but BNZ shot back yesterday, dropping its two-year rate to 6.9 per cent.
BNZ is not shifting down on its one-year fixed rate, saying it will concentrate on its two-year fixed deal, which it said customers preferred.
Bank sources said ASB may have lowered its rates in response to BNZ's aggressive pricing on the two-year fixed term. ASB could actually be losing some customers as their fixed terms came up for renewal, they said.
In August, ASB said it was taking market share from the other banks, lifting its home loans by $4.5 billion.
BNZ's business development general manager Andrew Whitechurch said yesterday the bank was keeping to its promise of "unbeatable" two-year fixed term mortgages till the middle of December.
The two-year rate was a "pretty good deal" compared with floating mortgage rates at 8.75 per cent, he said.
