Westpac is cutting its two-year fixed home loan rate while increasing its other mortgage rates, saying a sharp rise in funding costs is flowing through to longer-term lending.
The bank announced today that its advertised special two-year fixed rate will fall 16 basis points to 5.29% from Monday, which it says will be the lowest advertised two-year rate among the country's five largest banks.
At the same time, most other Westpac fixed home loan rates will increase by between 0.10 and 0.26 percentage points.
The six-month special rate will rise to 4.89%, the one-year rate to 5.19%, the 18-month rate to 5.45%, and the three-year rate to 5.59%. Four and five-year rates will increase to 5.65% and 5.75% respectively.
Its standard rates for those with less than 20% equity will also change.
In line with expectations, the Monetary Policy Committee adjusted the OCR from 2.5% to 2.75%. (Source: 1News)
Westpac NZ's Sarah Hearn said recent global events had pushed up wholesale interest rates used by banks to fund longer-term loans.
"Even with today's rate changes, we're absorbing a lot of our recent cost increases rather than passing them on to homeowners," she said.
Geopolitical tensions had contributed to the increase in wholesale funding costs, she added, warning borrowers to consider how future interest rate movements could affect them.
"With the OCR forecast to rise over the next year, now is a good time to think about your home loan strategy and what options may be best for you."
Term deposit rates increase
Westpac is also increasing some term deposit rates, with longer-term savings products rising by between 0.10 and 0.25 percentage points.
Its 12-month term deposit rate will increase to 4%, while the 18-month rate will rise to 4.30%.
The three-year rate will increase to 4.60%, and both the four and five-year rates will rise to 4.85%.
Shorter-term deposit rates, including those of six months or less, will remain unchanged.
The new rates take effect on September 21.
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