As per the media reports, the floating home mortgage rate has been scraped by ASB by 65 basis points - from 6.4 per cent to a market-low rate of 5.75 per cent. The bank described it as its lowest floating rate in more than 40 years.

This step taken by ASB seems to break a log-jam formed by the major banks that had denied slashing their floating mortgage rates after recent reductions in the Official Cash Rate.

“This rate is below BNZ's current lowest floating rate of 5.85 per cent, Kiwibank's 5.79 per cent, ANZ and National Banks' 6.45 per cent and Westpac's 6.49 per cent,” said a source.

Furthermore, ASB also slashed its business and rural base rates by 30 basis points, which brought the business base rate down to 10.55 per cent and the rural base rate to
7.6 per cent.

It will be from Saturday that the new rates will come into effect for new loans; while for the existing loans, these rates will come into effect from 28th September.

ASB's CEO of Retail Banking Ian Park said: “This is our lowest home loan floating interest rate since December 1967, the year that decimal currency was first introduced in New Zealand.”

Apart from this, ASB also fine-tuned some fixed mortgage rates and short-term deposit rates.

Park said: “ASB's new lending rates have been rebalanced to reflect our cost of funds and the level of risk associated with each lending category. Our new interest rate structure reflects the changing cost of offshore funds, which we rely on to supplement the funds our local depositors entrust us with. Together these deposits cover the amount we are lending out to our customers.”