ASB mortgage rates to rise

Press, 18 December 1985, Page 37

ASB mortgage rates to rise

PA Auckland As more financial institutions cut deposit interest rates yesterday, the Auckland Savings Bank confirmed that rates on exist-

ing mortgages would rise 1 per cent on New Year’s Day. The bank warned of the rise in October, but said when it was made official last month that first payments at the new rate would not be due until March.

The ASB general manager, Mr Laurie Edmonds, said yesterday that the bank regarded the interest rate increase for existing loans as catching up and it was most unlikely the rise would be cancelled before the March payment date. Most people with existing ASB mortgages will pay between 16.5 per cent and 18.5 per cent interest. Mr Edmonds said deposit rates would need to fall before the bank cut its lending rates, and at the moment most movement was in government stock and wholesale interest.

Most ASB deposits were in five-month and eightmonth special accounts at 19 per cent and 18 per cent, respectively, still below the rates offered by other institutions, he said.

The United Building Society dropped its term deposit rates yesterday, cutting its top rate of 21 per cent on six-month deposits by 1 per cent and other rates by 1 per cent to 2 per cent.

The managing director, Mr Colin Jenkins, said the society would also limit the size of deposits at the top. Loan rates had always moved about three months behind deposit rates and would continue to do so on the way down, Mr Jenkins said. The market for new loans at interest up to 23 per cent remained strong and, until current rates fell, the rate for existing loans of 21 per cent would not be cut The Bank of New Zealand joined other trading banks on Monday in cutting some deposit rates. Its overdraft base rate will fall 1 per cent to 19.25 per cent and personal loan rates by up to 2 per cent on Monday, but mortgages are not expected to fall until