ASB 1.79% offer surpasses $2 billion mark

The big four bank has experienced a surge in demand with the new-build loan product, one of the cheapest ever offered in New Zealand.

According to the lender, more than 3,000 separate applications have been made, as construction soars across the country.

New builds are set to become hot property in New Zealand as they are exempt from the Government's housing reforms, including the extended bright-line test and removal of interest deductibility. 

ASB's Glen Martin said the new product, launched with the help of the Reserve Bank's Funding for Lending Programme, had surpassed expectations. 

"Housing supply continues to be a huge issue for New Zealand so we’re really proud to be helping address this and see more Kiwi families achieve their home ownership dreams."

ASB's rate is available for three years from first drawdown, and customers building a 6 Homestar-rated home receive a $2,000 cash back sweetener. 

The success of ASB's new loan is set to be replicated by ANZ, which launched an even cheaper new build variable rate this week.

ANZ offers a floating rate at 1.68% for new build loans.

Both loans are significantly cheaper than the standard variable rates available to borrowers, with Kiwibank at 3.4% and the rest of the major banks above 4.4%.

Heartland Bank's online floating rate at 1.95% remains the cheapest available to all borrowers.