BNZ. Westpac to raise interest rates on floating home loans and deposits
While floating rates on home loans are on the rise, banks are keeping their fixed rates on home loans unchanged.
Bank of New Zealand and Westpac became the latest banks to announce increases in the cost of variable-rate loans, while leaving its fixed-term home loan rates unchanged.
BNZ announced that it would raise the rate on its floating rate loans from 6.39% to 6.79% on September 9.
It would also increase the interest it pays to savers in its Rapid Save account from 1.8% to 2.3% as of August 31.
Westpac said it would raise its variable home loan rates by 46 basis points, taking its variable rate to 6.85%. He was also raising savings account rates by 10 basis points to 35 basis points, bringing his Notice Saver account to 2.35%.
Kiwibank, ANZ and ASB all announced increases in floating mortgage rates and some deposit rates, following Reserve Bank Te Pūtea Matua’s decision to raise the official exchange rate by 2.5% to 3% last week.
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Rising home loan rates and even higher “test” rates that banks use to calculate whether people can afford the loans they are applying for have had an impact on house prices as buyers are able to borrow less.
After raising its official exchange rate (OCR) by another 50 points on Wednesday, the Reserve Bank predicted that house prices could fall as much as 20% from their peak.
Further OCR increases are likely as the Reserve Bank struggles to bring inflation down.
Reserve Bank Governor Adrian Orr speaks with Stuff a day after raising the OCR.
The Reserve Bank forecasts that the OCR will reach 4% next year and remain at this level until the end of the following year.
Rising interest rates will cost the average household an extra $3,000 a year, Westpac economists say.
Interest rates have risen sharply over the past year, pushing one-year home loan rates from around 2% to 5%.
Westpac economists said in their latest economic overview that this would have a significant impact on households, some of whom had not yet expired on their cheap fixed terms.
At the same time, food had risen by 7% and gasoline by 33% over the past year.
“These cost increases are felt by all families across the country and the pressure on household budgets has been more intense for low-income households, which tend to spend a greater share of their income on necessities,” said Westpac economist Michael Gordon in the bank’s latest economic overview.