Hey everyone, unless you've been living under a rock, I bet you've noticed that interest rates have risen over the past year. And if you're like me, you're probably wondering what the heck ASB bank is thinking by increasing their 5-year fixed term rate and reducing their 1-year fixed term rate.

As of December 28, 2022, the New Zealand Interest Rate Swap curve experienced a significant drop, with the one-year rate decreasing by 14 basis points and the five-year rate decreasing by 66 basis points. This movement in the market appears to be a strategic decision by lenders to increase their margins on shorter-term fixed rates while still offering a limited concession to borrowers.

With nearly half of all NZ mortgage debt due to refix between Oct 2022 and Sep 2023, I wonder if this is a clever marketing move. Banks are looking to capitalize on the high number of fixed rates rolling over shortly and using any chance they can get to lock people into higher rates.

While predictions of future interest rate movements may have driven ASB's recent changes to their mortgage offerings, it's important to remember that the bank's interests don't always align with your own.

It's wise to do your research and consider all options, comparing prices and terms with other lenders before deciding on a mortgage, and if needed, consult with a mortgage broker.