Short-term interest rates drop - long-term loans on the up

Last week, ASB cut its 1-year rate to 2.25% and its six-month rate to 2.99%. But its rates for three, four and five-year loans went up to 2.89%, 3.19% and 3.39% respectively. AIA's lending rates matched those of ASB's.

Following the ASB rates move Westpac made some similar changes on Friday with its one-year special rate dropping to 2.29%. Westpac's two-year special rate dropped to 2.59% but its three, four and five-year special rates went up to 2.89%, 3.19% and 3.39% respectively.

The BNZ announced yesterday it was removing its unique fixed seven-year 5.20% home loan rate - introduced in 2005 - from the market due to no one taking up the offer since 2018.

Elsewhere, the TSB also cut its one-year rate to 3.05% and its special rate to 2.25% but made no other changes to its long-term rates of between  3.29% and 3.79% and its special rates of between 2.49% and 2.99% for fixed-term loans of up to five years.

Economists nationwide are predicting short-term interest rates to remain steady as inflation climbs toward 2% after a slight rise in the March quarter.