ASB Raises Fixed Rates: What Borrowers Need to Know

The Reserve Bank’s 2.25% OCR meets a market that is pricing longer-term risk higher. ASB’s January fixed-rate hike on four- and five-year terms—while holding two-year rates at 4.75%—reveals a growing divergence between short-term stability and longer-term funding costs.

Date of latest ASB fixed-rate hike: 27 January 2026 · Two-year fixed rate after hike: 4.75% p.a. · Westpac two-year special: 4.99% p.a.

Five key facts stand out from the latest ASB rate adjustment.

The table below captures the immediate impact of the January 2026 move.

Source: ASB Bank – Home Loan Rate Report and RNZ

Why did fixed rates go up?

Wholesale funding pressures explained

• Banks fund fixed-rate mortgages largely through wholesale markets, not deposits. When global swap rates rise, banks pass on the cost.
• ASB’s January hike follows a period of rising longer-term swap rates, particularly for four- and five-year terms (Interest.co.nz – wholesale funding analysis).
• The two-year swap rate has been more stable, allowing ASB to hold its two-year rate at 4.75%.

The role of the Reserve Bank of New Zealand

• The RBNZ cut the OCR to 2.25% at its final 2025 meeting, aiming to stimulate the economy (ASB Bank – Home Loan Rate Report).
• But banks set fixed rates based on market expectations of future OCR moves, not the current OCR.
• Market pricing in late 2025 signalled that the OCR would stay low for a while, yet longer-term wholesale rates remained elevated due to global inflation concerns.

How banks set their fixed mortgage rates

• Banks add a margin to swap rates to cover costs and profit. That margin varies by institution and term.
• ASB’s move suggests it sees the cost of funding longer-term loans rising faster than short-term.
• Westpac’s 4.99% two-year special is a competitive short-term play, likely betting that funding costs will ease later.

Bottom line: ASB’s fixed-rate increase is a targeted response to wholesale funding costs for longer terms, not a broad upward shift. Borrowers with a two-year horizon are shielded for now.

Which bank is offering 4.99 interest rate in NZ?

Westpac’s 2-year special at 4.99%

• Westpac’s two-year special home loan rate of 4.99% is available for new lending (Opes Partners – current NZ mortgage rates).
• The rate is 24 bps above ASB’s two-year rate, but comes as a special that may not last.
• It targets borrowers who want certainty for two years but expect rates to fall later.

How ASB’s current rates compare

• ASB’s two-year rate of 4.75% beats Westpac’s special by 24 bps.
• On a $500,000 loan, that difference saves about $60 per month before fees.
• For longer terms, Westpac’s four- and five-year rates (5.59% and 5.79% as of June 2026) are higher than ASB’s post-hike levels, though ASB’s exact new rates for those terms are not published in the January announcement (Opes Partners).

Other bank offers in early 2026

• BNZ also raised some fixed rates on 18 December 2025, but its two-year rate remains competitive at around 4.99% (RNZ).
• Kiwibank and ANZ have not announced comparable changes in the same period.

Bottom line: ASB holds the edge on two-year pricing, but Westpac’s special appeals to borrowers who value the ability to switch to a lower rate sooner if the OCR falls.

What are ASB’s fixed mortgage rates?

Current ASB fixed-rate table

• ASB’s published rates as of the January 2026 hike are listed on its official site (ASB – current home loan rates).
• The two-year rate is 4.75%; four-year and five-year rates were increased but exact post-hike percentages are not disclosed in the research notes; the increases were 16 bps and 24 bps respectively.
• One-year and three-year rates were not adjusted in this round.

How to read ASB’s effective dates

• New lending rates take effect from 28 November 2025; existing loans are repriced from 2 December 2025 (ASB Bank).
• The 27 January 2026 hike applies immediately to new customers, and to existing borrowers once their current fixed term ends.

Changes from the December 2025 adjustments

• The December 2025 rise affected varying terms; the January 2026 move is more targeted at longer terms.
• ASB’s two-year rate has been unchanged since late 2025, indicating a stable short-term cost outlook.

Bottom line: ASB’s fixed-rate structure is now more tiered than before. Short-term borrowers benefit from a stable two-year rate, while those locking in for four or five years face higher costs.

Will NZ interest rates drop in 2026?

Analyst forecasts for the OCR

• MoneyHub’s outlook says OCR could stabilize between 2.00% and 3.50% over the next two years (MoneyHub – Interest Rate Predictions 2026 & 2027).
• That would imply big-bank fixed mortgage rates in the range of 3.50% to around 6.00%.
• ANZ economists project the OCR staying at 2.25% through 2026 before a gradual rise in 2027 (RNZ).

Historical rate cycles

• The current cycle resembles the post-GFC period when the OCR stayed low for years.
• Longer-term fixed rates tend to move ahead of the OCR, so current hikes may signal the end of the trough.
• Between 2010 and 2014, the OCR hovered around 2.50% and fixed rates ranged from 4.5% to 6.5%.

Pros and cons of fixing now vs waiting

Bottom line: For homeowners, the trade-off is certainty now versus flexibility later. Fixing for two years at 4.75% is a safe bet; waiting to see if rates drop further means rolling the dice.

Is ASB worth it for a home loan?

ASB service and fees compared

• ASB offers an online break fee calculator and prepayment options without penalty (ASB – break fee calculator).
• Its Better Homes Top package bundles a home loan with a credit card and fee waivers for a monthly fee.
• Customer satisfaction surveys place ASB in the top tier of NZ banks (NZ Banking Association, 2025).

Break fees and flexibility

• Break fees for fixed loans are calculated based on the difference between your contracted rate and current market rates.
• If rates fall, breaking a fixed loan can cost thousands; if they rise, the fee is minimal.

Customer satisfaction context

• Regularly rated as one of New Zealand’s most trusted banks.
• Mobile app and digital tools are well-regarded.
• Rate competitiveness varies by term, so borrowers should compare across all terms.

Bottom line: ASB remains a strong choice for borrowers who value digital convenience and a competitive two-year rate. Those prioritizing the lowest possible long-term rate should shop around.

Specifications: ASB’s January 2026 fixed-rate adjustments

Nine data points, one pattern: longer-term costs are rising while short-term rates remain sticky.

The table below captures the precise details of ASB’s January 2026 repricing.

Sources: ASB Bank – Home Loan Rate Report and RNZ

Timeline of ASB’s recent fixed-rate moves

• 28 November 2025 – ASB’s new rates become effective for new customers (ASB Bank).
• 2 December 2025 – Existing home loans see the rate adjustments (ASB Bank).
• 18 December 2025 – ASB and BNZ increase some fixed rates (RNZ).
• 27 January 2026 – ASB raises four-year and five-year fixed rates by 16 to 24 bps (ASB Bank).

Bottom line: The pattern shows two rate increases in two months, both concentrated on longer terms. The next move likely depends on swap rates and the RBNZ’s OCR trajectory. For more information on ASB’s fixed rate changes, you can visit $irelandledger.net.

“These rate adjustments reflect increasing wholesale funding costs for longer-term fixed mortgages.”

— ASB spokesperson, Interest.co.nz

“Borrowers are facing a mixed picture: short-term rates are stable, but locking in for four or five years now costs more.”

— Business reporter, RNZ

“The gap between short and long-term fixed rates has widened, giving borrowers a clearer trade-off.”

— Interest.co.nz analyst, Interest.co.nz

For New Zealand homeowners, the decision is no longer about whether to fix, but for how long. ASB has drawn a line at two years: fix there and you pay 4.75%, fix longer and the premium rises. The catch is that if the OCR drops later, you’ll be stuck paying above-market rates unless you pay a break fee. For borrowers with a medium-term horizon, the two-year rate at ASB is hard to beat. For those who want to gamble on a steeper drop in the OCR, Westpac’s 4.99% special offers a lower anchor for future refinancing — but at a higher cost for now.

Related reading: Current mortgage interest rates in NZ

Homeowners can find the full breakdown of ASB’s rate increases at the full breakdown of ASBs rate increases, which also compares them with offers from other lenders.

Frequently asked questions