BNZ customers with home loans had a shock after the bank increased interest rates across several of its terms.
The increases come despite the official cash rate (OCR) remaining stable at 5.5 percent for the past few months.
This week, BNZ indicated its classic fixed six-month interest rate would move from 7.25 percent to 7.39 percent, while the four and five-year classic rates would go up to 6.49 percent from 6.29 percent.
Some of the bank's standard rates were also increasing.
Economist Shamubeel Eaqub said many banks were trying to protect their profit margins given the rising cost of funding.
Most banks tended to increase their mortgage rates at about the same time, he said.
"This time around, it looks like BNZ's gone just a little bit earlier. If the other banks don't move, you'll see people shopping around and BNZ will have to match the market."
Eaqub said global interest rates were rising because inflation throughout the world was higher for longer than expected.
He told AM that was impacting wholesale funding costs for New Zealand banks.
New Zealand was, essentially, "at the mercy" of global markets, he said.
"When it comes to those fixed mortgages of 2, 3, 4, 5 years, those are largely referenced off those global central bank rates.
"It's this global interest rate environment that tends to affect fixed mortgages, whereas the Reserve Bank really affects those short-term mortgage rates - particularly the floating mortgage rates.
"There have been periods when fixed mortgage rates are not nearly as expensive as floating, so people will gravitate towards those cheaper mortgage rates."
People at the moment, however, were being impacted by the inflationary shock, he said.
"Increases in interest rates around the world are quite syncronised," said Eaqub.
"Everybody's increasing interest rates and so there is nowhere for people to hide.
"If you're refinancing your mortgages this year, boy - it's going to hurt."
A BNZ spokesperson said the bank strived to offer competitive rates to borrowers.
"Swap rates are just one of the factors that influence interest rates," the spokesperson told AM.
"The cost of funding, which is predominantly determined by the rates banks can borrow overseas, has been increasing and some of this increase is being passed through to interest rates."
