AUCKLAND (CU)_Last week, ahead of the central bank’s announcement on the OCR, the Auckland Savings Bank (ASB) decided to update its mortgage rates, increasing the fixed one-year and two-year rates by 0.36 per cent, while its five-year rate was raised by 0.3 percentage points. According to the bank’s general manager of retail banking the move was attributed to the robust economy of the pacific island. Now, several other major banks in New Zealand have decided to follow suit, in response to several factors, including the progressive increases in wholesale interest rates.
Accordingly, ANZ announced an increase of 31 basis points of its one-year rate to 2.5 per cent, while its two-year rate was also increased by the same proportion to 2.9 per cent. Meanwhile, the bank’s three-year rate rose to 3.24 per cent from the previous rate of 2.99 per cent. However, Auckland-based Bank of New Zealand (BNZ) increased its rates by higher proportions, as the bank’s one-year rate reached 2.55 per cent, increased by 36 basis points. BNZ’s two-year rate rose by 40 basis points to 2.95 per cent, as the three-year rate reached 3.25 per cent, with an increase of 26 basis points.
Westpac was also among the banks which updated their mortgage rates, increasing its one-year rate by 36 basis points to 2.55 per cent. The bank’s two-year rate increased by 30 basis points to 2.89 per cent and the three-year rate by 30 basis points to 3.29 per cent.
Nevertheless, Kiwibank has decided to go in the opposite direction, with the aim of ‘providing certainty’ to its customers in a rising-rate environment. Accordingly, the New Zealand Post’s subsidiary dropped its two-year home loan rate to 2.49 per cent. While the bank’s variable rate increased from 3.4 per cent to 3.75 per cent, it is still below all major competitors in the market.
“We challenged the market by reducing the pricing gap between fixed and floating rates, giving our customers greater flexibility, choice, and savings” Kiwibank’s chief executive Steve Jurkovich said. “In a time of uncertainty, we wanted to provide Kiwis with an opportunity to pay back their loans faster, save, or buy local and support our economy.”
