ASB launches 1.79% variable rate for new builds

The big four bank has unveiled its Back My Build home loan for owner-occupiers and investors building a home from scratch, or buying a house-and-land package. 

ASB has tapped into the Reserve Bank's Funding for Lending Programme to launch the new product. The central bank's FLP was created to drive down lending rates for Kiwi borrowers in the wake of the Covid crisis. 

The new variable rate is available for three years, from when a customer makes their first draw down. Borrowers can pay off their loans with lump sum contributions, or move to a fixed rate at any point. 

ASB's executive GM of retail banking Craig Sims said: "Housing supply is a huge issue for the New Zealand economy. That is why we’re keen to give a leg-up to customers who want to join us in being part of the solution.

"We’ve deliberately chosen to make the offer available to both owner occupiers and investors in recognition of the role investors can play in making new, high quality homes available for Kiwi families."

Customers will also receive cashback if they "incorporate green designs" into the new home. The bank has partnered with the New Zealand Green Building Council, and will reimburse customers $2,000 if they can evidence their intent to build a 6 Homestar rated home, or higher.

Sims added: "A more sustainable housing market is about increasing housing supply, but it is also about creating more energy-efficient healthy homes."

Back My Build becomes the cheapest home loan in the market, and 16 basis points cheaper than Heartland's recently sharpened variable rate. 

The cheapest fixed rate loan remains Heartland's 1.85% one year home loan.