Mortgage Rates

ANZ, BNZ and Westpac observe ASB by lifting mortgage charges



07/15/2021 11:20 PM

Mortgage repayments are getting more expensive. Photo / Getty Images

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

ANZ, BNZ and Westpac followed ASB’s lead and ended the downward trend in interest rates.

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

An ANZ spokesman said the bank had increased its home loan rates “in response to a number of market factors, one of the most important being the gradual increase in wholesale rates”.

The BNZ increased its one-year interest rate by 36 basis points to 2.55 percent, the two-year interest rate by 40 basis points to 2.95 percent and the three-year interest rate by 26 basis points to 3.25 percent.

Westpac’s one-year rate increased 36 basis points to 2.55 percent, the two-year rate increased 30 basis points to 2.89 percent, and the three-year rate increased 30 basis points to 3.29 percent.

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

The independent Kiwibank, TSB, Co-operative Bank, SBS and Heartland have not yet raised their mortgage rates. Neither do the smaller New Zealand providers HSBC and Bank of China.

This increase in the number of large providers comes in the same week as the publication of the inflation data, which has shown that the cost of household necessities has risen significantly by 3.3 percent over the year to date – the largest increase in 10 years.

A rise in interest rates will continue to put pressure on homeowners, many of whom are currently burdened with heavy mortgages.

To put that in context, shifting the two-year rate by 0.36 points would translate into an additional $ 1,824 per year ($ 152 per month) for a recent homebuyer who has a $ 800,000 mortgage over 30 Years paid off.

The Reserve Bank kept the official cash rate at a record low of 0.25 percent this week, but economists at ASB and ANZ predicted an increase back in August.

The economists at Kiwibank are planning two OCR rate hikes by the end of the year.

“By the end of the year we will likely see two hikes and a rise to 1 percent by February,” the economists said.

“More than 1 percent will depend on whether the interest rate sensitivity of the economy exceeds the record-low interest rates.

“We have planned to raise the cash rate further to 1.5 percent, but in the short to medium term, that is likely to be all we see.”

While a rate hike will hit homeowners, those with savings in the bank will benefit from a surge in interest income.

The Kiwibank has released a statement confirming that it will increase its fixed deposit rate for the 200-day term from 0.8 percent to 1.2 percent.

ASB has increased the interest rate for six-month time deposits by 0.2 percent, from 0.8 percent to 1 percent. The biggest increase was in the three-year fixed-term deposits, which rose by 0.3 percent from 1.4 percent to 1.7 percent.

Westpac has increased its three- to five-year fixed-term deposit rates by 20 basis points each. A fixed deposit with a term of five years now offers 2 percent per year when due.