Bidders miss point of online home loan auction

An online auction of an ASB home loan deal has generated high interest -- 10.4 per cent interest in fact.

ASB are auctioning the interest rate on a one year home loan of $100,000. The bank's current advertised 12 month fixed interest rate is 7.9 per cent, or $7900 on $100,000.

The bank started the Trade Me auction on Monday, the theory being that any bids below $7900 would be a saving. But bidders don't seem to have grasped the concept.

Shortly before 11pm yesterday, one eager online shopper trumped a bid of $7350 with a whopping $10,400 -- the equivalent of a 10.4 per cent interest rate.

The next minimum bid is $10,450 and the auction is not due to close until next Monday.

The question and answer section relating to the auction on Trade Me's website shows how confused some bidders are.

"I read it as a $1 reserve for [a] $100,000 home loan, meaning if I won it for $5000 I would pay that and receive a $100,000 home loan," said bidder 'nessa150' in online feedback on Trade Me.

ASB's head of retail banking and marketing Ross McEwan said he thought the auction had been clearly explained on the Trade Me website, but said the bank would make enquiries to see if the bidder was confused.

"We will need to clarify that. We don't want people bidding for something that they are not clearly understanding," he said.

He said the bank would talk to Trade Me about how to deal with the $10,400 bid, which could possibly be removed.

He said there was no cap on the auction.

"We haven't put a ceiling because we were letting the market dictate the price of it."

Mr McEwan said the online auction had been an interesting exercise. "It's an interesting exercise when people have a free option to actually bid, the price they are prepared to pay. It does show that particular market at that time for a direct offer."

- NZPA