ANZ, BNZ and Westpac Following ASB Raise Mortgage Rates



Repayment of mortgage loans will rise in price. Photo / Getty Images

All four major banks in New Zealand have confirmed rate hikes.

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

ANZ raised the annual rate by 31 basis points to 2.5 percent, the two-year rate by 31 basis points to 2.9 percent and the three-year rate by 25 basis points to 3.24 percent.

An ANZ spokesman said the bank raised rates on home loans “in response to a number of market factors, the key one being a gradual increase in wholesale interest rates.”

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

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

ASB announced a similar rate hike earlier this week, so it is likely that other major banks will soon follow suit.

Independent Kiwibank, TSB, Cooperative Bank, SBS and Heartland have yet to raise their mortgage rates. The smaller New Zealand providers HSBC and Bank of China also do not.

This upswing from major suppliers comes in the same week as inflation data, which showed that the cost of basic necessities rose markedly over the year by 3.3% – the largest increase in 10 years.

The rise in interest rates will put additional pressure on homeowners, many of whom are currently saddled with large mortgages.

To put this in context, a 0.36 point two-year rate shift equates to an additional $ 1,824 per year ($ 152 per month) for a recent home buyer paying off a $ 800,000 mortgage over 30 years.

The Reserve Bank this week kept the official money rate at a record low of 0.25 percent, but economists from ASB and ANZ are forecasting an increase in August.

By the end of the year, Kiwibank economists plan to raise the OCR interest rate twice.

“We are likely to see two increases by the end of the year and a rise to 1% by February,” economists said.

“The excess of 1% will depend on the economy’s sensitivity to interest rates, reaching record low rates.

“We have planned another increase in the money rate to 1.5%, but this is probably all we will see in the short and medium term.”

While the rate hike will hit homeowners, the downside is that those with savings in the bank will benefit from increased interest income.

Kiwibank issued a statement confirming that it will increase the rate on time deposits to 1.2 percent from 0.8 percent for a 200-day maturity.

ASB raised the interest rate on six-month deposits by 0.2 percent, from 0.8 percent to 1 percent. The largest growth was noted for the three-year term deposit, which increased by 0.3% from 1.4% to 1.7%.

Westpac has increased its fixed rates on deposits for three to five years by 20 basis points each. The five-year term deposit now offers 2% per annum at maturity.

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