One of our major banks believes a new home loan will help housing supply issues.

ASB's offering a 1.79-percent variable interest rate for customers building a new home from scratch or purchasing a home and land package.

It will use funds available under the Reserve Bank’s Funding for Lending Programme.

The bank's Craig Sims hopes the interest rate will encourage more customers to consider new build options.

"Our goal over the next 12 months is help an additional 1,000 new build projects get underway ."

He says the scheme will make the housing market more sustainable.

"It's about making sure we have one more reason to encourage customers to think about new build options, whether owners or investors.

"And in addition, we want to go one step further towards building sustainable homes."

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• Cut-price mortgages: Major bank offers record low rate for new builds