ASB has cut both its advertised six-month and 18-month fixed-term mortgage interest rates, effective tomorrow.

The bank said it was cutting its six-month rate by 50 basis points to 5.25 per cent and its 18-month rate by 40 basis points to 5.40 per cent.

The cuts follow ASB dropping its one to five-year advertised fixed-term rates last week, amid a flurry of cuts to fixed-term rates from all the banks over the past couple of weeks as their own cost of borrowing falls and they compete for customers in a low growth market.

However, no bank has yet cut its floating, or variable, mortgage rate. ASB's is 5.75 per cent.

Advertisement

ASB's new six-month rate is bettered only by SBS Bank's 4.99 per cent rate, although this is conditional. Its new 18-month rate is, however, 30 basis points higher than BNZ's market leading 5.10 per cent.