ANZ, BNZ and Westpac follow ASB in raising mortgage rates


Mortgage payments are expected to become more expensive. Photo / Getty Images

New Zealand’s big four banks have all confirmed a rate hike.

ANZ, BNZ and Westpac followed ASB’s lead in halting the downtrend in interest rates.

ANZ raised its one-year rate by 31 basis points to 2.5%, its two-year rate by 31 basis points to 2.9% and its three-year rate by 25 basis points to 3.24% .

An ANZ spokesperson said the bank had raised mortgage rates “in response to a number of market factors, one of the main ones being the gradual increase in wholesale interest rates.”

BNZ raised its one-year rate by 36 basis points to 2.55%, its two-year rate by 40 basis points to 2.95% and its three-year rate by 26 basis points to 3.25 %.

Westpac’s one-year rate rose 36 basis points to 2.55%, its two-year rate 30 basis points to 2.89% and its three-year rate 30 basis points to 3.29 %.

ASB announced similar rate hikes earlier this week, making it likely that other big banks would follow suit soon.

Independents Kiwibank, TSB, Co-operative Bank, SBS and Heartland have yet to raise their mortgage rates. Neither do the small New Zealand suppliers HSBC and Bank of China.

This increase from major suppliers comes the same week as the release of inflation data, which showed the cost of household necessities rose sharply by 3.3% for the year so far – the largest increase in 10 years.

An increase in interest rates will put additional pressure on homeowners, many of whom are currently burdened with large mortgages.

To put this in context, a 0.36 point change in the rate over two years would equate to an additional $ 1,824 per year ($ 152 per month) for a recent buyer paying off a mortgage of $ 800,000 over 30 years.

The Reserve Bank kept the official exchange rate at an all-time high of 0.25% this week, but ASB and ANZ economists predicted a hike as early as August.

Kiwibank economists select two OCR rate hikes by the end of the year.

“We’re probably going to see two hikes by the end of the year and a surge to 1% by February,” economists said.

“Beyond 1%, it will depend on the sensitivity to interest rates of the economy which will emerge from record rates.

“We have forecast another increase in the cash rate to 1.5%, but that will probably be all we see in the short to medium term.”

While an increase in rates will hurt homeowners, the flip side is that those with savings in the bank will benefit from increased interest income.

Kiwibank released a statement confirming that it will increase its term deposit rate to 1.2%, from 0.8% for its 200-day term.

ASB raised the interest rate on its six-month term deposits by 0.2 percent, with the rate going from 0.8 percent to 1 percent. The largest increase was for the three-year term deposit, which saw an increase of 0.3 percent from 1.4 percent to 1.7 percent.

Westpac has increased its three- to five-year term deposit rates by 20 basis points each. A five-year term deposit now offers 2 percent per annum at maturity.

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