Major New Zealand banks have increased their home lending rates, this week with many longer-term rates tipping above 7 percent.
On Thursday, Westpac became the latest bank to increase its home loan rates - citing a rise in wholesale rates as the cause. It moved its standard 18-month and two-year rates by 14 basis points to 7.69 percent and 7.59 respectively.
The bank's special rates for the same terms also increased by the same margin.
Westpac also lifted its current nine-month term deposit rate to 6 percent this week.
It follows BNZ increasing its home loan rates on the same terms on Monday. The bank's 18-month special rate is now 7.09 percent, while its special two-year rate is 6.99 percent.
Meanwhile, on Monday, Kiwibank raised its six-month home loan rate and two-year special by 10 basis points. It also raised its one-year special by 16 basis points to 7.15 per cent.
The banks are following suit with ASB, which three weeks ago became the first bank to recently hike its rates above 7 percent for its two-year fixed mortgage. At the time, leading economist Brad Olsen said other banks may copy the rise.
This is despite the Reserve Bank holding interest rates for the second time in August with the official cash rate (OCR) remaining at 5.5 percent.
Economist Shamubeel Eaqub told AM last month the Reserve Bank tends to affect short-term mortgage rates - particularly floating rates - more than the longer term. When it comes to fixed mortgages over two years, they are largely referenced off global central bank rates.
Westpac said the current wholesale rates, which the bank uses to fund its home leading, have been volatile and sharply rose in the past fortnight.
The bank "continues to have competitive home lending rates across the board and is working closely with customers to help them manage cost-of-living pressures", a spokesperson said.
"We understand this may be a worrying time for homeowners due to re-fix their mortgage. We're proactively contacting home loan customers and people who may be facing financial difficulty to ensure they're well supported and understand their options."
Banks' two-year fixed-term home loan rates. Note special rates are for customers with a minimum of 20 percent equity:
- Westpac – 7.59 percent (standard), 6.99 (special)
- BNZ –7.59 percent (standard), 6.99 percent (special)
- Kiwibank – 7.99 percent (standard), 6.99 percent (special)
- ASB – up to 1.5 percent more on special rate depending on LVR (standard), 7.05 percent (special)
- ANZ – 7.59 percent (standard), 6.99 percent (special)
