We asked ASB’s General Manager of Retail Product, Glen Martin, what sets ASB apart when it comes to home loans, and what Kiwis should consider before choosing a home loan.
ASB has won the Canstar Bank of the Year Award – Home Loans for the second year in a row. What is it that sets ASB apart with its home loan offerings?
We’re passionate about helping New Zealanders own their own home – whether that be their first, second or tenth – as well as helping them manage, and pay down their home loan faster.
We have a range of online tools to help New Zealanders get into home ownership, and we back that up with our home loan specialists who provide additional support for customers in what can be a complex and scary process. These tools include a range of calculators to help customers understand how much they could borrow and what their repayments might be, as well as tools for property investors. We also have ASB Suburb Seeker, which is our online tool for customers to research and find suburbs that are within their budget and criteria – such as schools and travel time.
To help New Zealanders manage and pay down their home loan faster, ASB has an online platform called Home Central. This unique service provides our customers with a visual display of how their home loan is tracking. It illustrates how changes made to their loan, such as increasing mortgage repayments or changing the frequency of payments, can make a significant impact to the cost and duration of the loan. ASB Home Central allows our customers to make smarter financial decisions, whether that be helping them to pay off their loan faster, or understanding their equity position to purchase investment property.
In addition to the home loan servicing options, Home Central also provides up-to-date information on their property’s estimated value, at no cost (third party provided online property value reports can cost up to $50 each).
What are ASB’s views on trends in the home loan market, given the current OCR environment and RBNZ’s indication that it is likely to lower?
We expect Auckland house prices to remain flat over the next few years, while incomes continue to lift. This should continue to see affordability improve and the house price-to-income ratio gradually fall. Outside of Auckland, some regions are experiencing a shortfall in housing supply as the pick-up in regional population outpaces regional dwelling construction. As new housing construction is completed over 2019, we expect the housing supply to catch up to new demand from population growth, and reduce some of the upward pressure on house prices outside of Auckland and Christchurch.
Government housing policies have reduced investor demand at the margin, including the Healthy Home Bill, ring-fencing tax losses on rental properties, and placing restrictions on foreign buyers. The potential introduction of a capital gains tax could also be weighing on investor price expectations. This has helped first home buyers to get into home ownership with less competition and purchase price pressure.
With regards to interest rates, we believe borrowers can expect lower rates for a reasonable amount of time – through 2019 and into 2020 – however RBNZ capital adequacy rules may see mortgage rates rise gradually.
What is important for consumers to consider when taking out a home loan?
Buying a home and arranging a home loan can be a complex and scary process. We are here to help with a range of online tools and home loan specialists that can help our customers through this journey.
A few key things to consider when taking out a home loan:
- Interest rates may be low today but could rise in the future. Use our online calculators to ensure you can afford your home loan repayments in a higher interest rate environment.
- If you have less than a 20% deposit, a low equity margin will apply to your home loan. This should be factored into your home loan repayments to, again, ensure you are able to meet these repayments comfortably today and into the future.
- Whether you should fix or float, or split and do both should also be considered. A fixed loan will give you certainty of your interest rate and repayments over a fixed period of time, whereas a floating loan gives you extra flexibility to pay larger sums off your loan with the likes of bonuses or commissions.
- Protecting your house, and you and your family. Considering what cover you want to have in place is an important decision, and an ASB Insurance Manager can help you through that process. Considering what would happen if you became unable to work, and the financial pressure this could place on you or your family, is an important part of the home loan process.
- Finally, you may be able to use your KiwiSaver to help you build a deposit to get into your first home faster. We can also help with this process.
What does ASB recommend to help consumers get ahead with their home loan?
ASB gives customers more control over their home loan with our online tool Home Central. This is purposely designed so that customers can take a more active role in managing their home loan; whether that’s re-fixing it, understanding their latest property value, or making small increases to their repayments. Even small increases in repayments can save customers significant interest costs over the life of the loan, and reduce the time it will take to repay it. We recommend not just setting and forgetting your home loan, but taking an active role in ensuring it is working for you – Home Central allows you to do this.
We encourage customers to try out our simple and intuitive tools to explore and test options on their home loan repayments, and to visualise the impacts that these changes make before proceeding. Customers can experiment with multiple scenarios as often as they like, and once they feel comfortable, changes can be submitted there and then, and are effective immediately.
To date, our average customer has increased their repayments by around $75 per week, saving them over $36,000 in interest, and reducing the term of their loan by more than six years.
Canstar’s verdict: Why ASB is Bank of the Year- Home Loans
ASB’s consistency across its home loans products has resulted in them winning Bank of the Year – Home Loans.
“ASB wins the Bank of Year award for providing outstanding value products across residential and investor home loans,” says Canstar NZ general manager Jose George.
ASB received 5-stars for 5 products in the Investment Fixed, Investment Floating, Residential Fixed and Line of Credit profiles.
Mr George says, “ASB’s strong performance can be put down to the fact, the bank leads in several categories, offering exceptional process and budgeting tools, accessibility, education and loan research.”
Overall, the bank is a category leader with the greatest accessibility to branches and services.
ASB is also recognised for its efficient repayment calculators, property reports and case studies which consumers can use to assist them in choosing a home loan.
“It’s the combination of, not only its strong product assessment performance, but also its leading Institutional offering that sets ASB apart from the rest of the market,” says Mr George.
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