Three major banks lift floating rates as OCR hike flows through

Three of the country's major banks are lifting their variable home loan rates by 0.25% per annum after the official cash rate was hiked yesterday.

ASB, BNZ and Westpac announced changes today.

BNZ's changes take effect from July 29 for both new and existing customers, with its standard variable rate rising to 6.09%, and three other variable rates all climbing to 6.19%. The bank is leaving its fixed home loan rates unchanged.

The move follows the Reserve Bank's decision to lift the OCR to 2.50% – its first hike in more than three years, and the first increase since May 2023.

Westpac was also raising its floating lending and savings rates.

The changes take effect from Monday for new customers and next Thursday for existing customers, with variable home and business loan rates all rising 0.25% per annum.

Westpac NZ managing director of product, sustainability and marketing Sarah Hearn said the bank would keep supporting customers on both sides of the ledger.

"We'll continue working hard to support both borrowers and savers through an interest rate tightening cycle," Hearn said in a media release.

"The large majority of our home lending is on fixed terms, and there are no changes to any of our fixed rates today."

Fixed home loan rates at Westpac were also staying unchanged.

Hearn said a rising OCR would likely mean good news for savers, adding the bank had held its saver rates unchanged over the past year even as the rate fell.

She said customers had largely coped well with recent economic uncertainty, but encouraged anyone worried about their finances to talk to the bank.

Westpac's key variable savings product, bonus saver, will also climb 0.25% per annum from Monday, lifting its total potential rate of return to 1.50%.

The bank's simple saver rises 0.15% to 0.20%, while its notice saver holds at 3.00%.

Among the variable home loan changes, Choices Floating and Choices Offset both move to 6.14% per annum, and Choices Everyday rises to 6.24%.

ASB was the latest to move, lifting its variable home loan rates by 0.25% and raising some of its savings products.

The bank's housing variable rate rises to 6.04% and its Orbit variable rate to 6.14%, effective from Tuesday for new customers and Wednesday for existing customers.

ASB was leaving its fixed home loan rates unchanged, and recently cut some longer-term fixed rates.

Executive general manager personal banking Adam Boyd said the increases would be difficult for some households.

“Interest rate increases can be difficult for many households. We have also recently reduced some of our long-term fixed home loan terms by up to 30 basis points.

"We encourage any customers feeling any pressure with their mortgages to get in touch with us early to work through options. We also know many customers will be working hard to build their savings, and these increases will help them with their goals.”

Yesterday, the Reserve Bank's monetary policy committee signalled more OCR increases to come, although it described the timing of future rises as "highly uncertain".

Cotality chief property economist Kelvin Davidson said the decision was not universally expected, but appeared to reflect a view that increases towards a more neutral level of around 3% were inevitable.

"They may as well start now," Davidson said, "even though fuel prices have eased and second-round inflation risks have probably receded too."

"A continued economic recovery in the coming months, even if [or] when the OCR rises again, would tend to bolster sales volumes and property values too.

"But a fresh [property] boom seems very unlikely. Indeed, listings remain elevated, giving buyers the balance of power on pricing. The election – and potential tax changes – appears to be dampening investors’ moods too.

"Meanwhile, a mindset shift also seems to be underway, with a lot of questions being asked about long-run capital growth prospects in a world where new housing supply looks to have taken a permanent step higher."