Tamsyn Parker

Tamsyn Parker is the NZ Herald's Money Editor

Kiwibank lifts rates

Kiwibank signage on the Kiwibank shop located on Wyndham Street in Auckland. Photo / Dean Purcell
Kiwibank signage on the Kiwibank shop located on Wyndham Street in Auckland. Photo / Dean Purcell

Kiwibank has become the third bank to lift its mortgage rates in a week.

Kiwibank said from today it would increase its one year home loan rate from 5.25 per cent to 5.45 per cent while its two year rate would increase from 5.65 per cent to 5.95 per cent for borrowers with at least 20 per cent equity.

Borrowers with less than 20 per cent equity will have to pay 6.29 per cent per annum for the two year fixed rate.

Kiwibank said it had lifted rates because of increased costs.

"The changes have been made as a result of increased costs of wholesale funding," the bank said in a statement.

Kiwibank's move follows that of ANZ and Westpac which lifted mortgage rates last week by between 9 basis points and 34 basis points.

Westpac increased its two-year rate to 6.29 per cent for those with at least 20 per cent equity and 6.89 per cent for those with less than 20 per cent equity.

ANZ boosted its two-year fixed rate from 5.95 to 6.29 per cent for standard borrowers and from 6.45 to 6.79 for low equity borrowers.

Both ASB and BNZ have said their rates are under constant review.

Earlier this month the Reserve Bank kept the official cash rate at 2.5 per cent but warned the rate would rise next year.

The mortgage rate changes are a blow to borrowers but savers are finally seeing some benefits.

Kiwibank said it would also increase its term deposit rates.

It has lifted its two year up 25 basis points, three year rate 30 basis points and four year rate by 25 basis points. The rates on its term deposits range between 4.65 per cent and 5.25 per cent.

ANZ also increased its deposit rates last week by between 10 basis points and 25 basis points. Its two year term deposit rate is now at 4.75 per cent.

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