Westpac lifts its rates - but keeps some of the pain

Westpac Bank is to increase its headline floating home loan rate for high equity borrowers by just 10 basis points in the last of the major banks to move in the wake of the Reserve Bank's official cash rate hike.

New Zealand's central bank increased cash rate from 2.5 per cent to 2.75 per cent last week on the back of New Zealand's strengthening economy.

Westpac said it would absorb part of the increase in a bid to remain competitive. The bank said its "Choices Floating" rate would rise to 5.74 per cent but all other floating rates would rise by 25 basis points.

Interest on its short term deposits would also rise by 25 basis points.

The rates would change from tomorrow for new customers and on April 11 for existing customers.

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Ian Blair, Westpac general manager retail, said it was committed to keeping its floating rates extremely competitive after a period of historical low rates.

"We want New Zealanders to know we are open for business and will continue to offer competitive interest rates."

He also urged customers to ensure their loans were structured to suit their circumstances in light of further potential increases in the cash rate.

Westpac was the last of the banks to make a move following the cash rate increase.

BNZ announced increases to its rates on Tuesday while ANZ, ASB and Kiwibank all increased rates last week.