ASB cuts some home loan rates ahead of Official Cash Rate announcement

A major bank has cut some of its home loan rates a day before the Reserve Bank’s Official Cash Rate (OCR) announcement.

ASB has cut its 18-month mortgage rate to 6.89 per cent per annum.

That’s a 26-basis-points reduction from the previous rate of 7.15 per cent.

ASB said it now had the lowest 18-month rate among the major banks.

ASB personal banking executive general manager Adam Boyd said the new rate was good for people “looking to hedge their bets in the current economic environment”.

Although there is often an expectation an OCR rise will trigger an increase in mortgage rates and savings deposit rates, the reality is not always so straightforward.

Most major bank economists expect Reserve Bank governor Adrian Orr to keep the OCR at 5.5 per cent this week.

“Whilst we don’t know the direction of the OCR, wholesale rates remain elevated and the geopolitical environment remains volatile,” Boyd said.

“Our 18-month rate may appeal to customers who want to balance security with flexibility.”