BNZ undercuts rivals Kiwibank, ANZ and Westpac as it hikes key mortgage rates

BNZ is the latest major bank to hike some of its mortgage rates. Photo / Mark Mitchell

BNZ has undercut its major rivals as it announced further increases to its home lending rates today.

Four of the five big banks in New Zealand have now hiked their mortgage rates in the latest round of moves.

BNZ said its one-year fixed home loan rate will increase 6 basis points (bps) to 4.65%, effective today.

Its 18-month fixed lending term will also rise 6bps to 4.85%.

That move was lower than Westpac, which last week hiked its special one-year fixed mortgage rate by 10bps to 4.69% and its 18-month term by 14bps to 4.99%.

ANZ had also lifted its special one-year fixed rate by 10bps to 4.69%.

ASB has the lowest one-year fixed rate among the big five banks at 4.59%, but is the last bank yet to announce any mortgage rate increases in the current round.

BNZ also said its two-year fixed home loan rate would increase 20bps to 5.09%, in line with ASB.

However, the rate remains 20bps lower than ANZ and Kiwibank (5.29%) and 10bps better than Westpac (5.19%).

The major banks have been lifting mortgage rates again as wholesale interest rates have risen.

More economists – including those at ANZ, ASB and Infometrics – have brought forward their Official Cash Rate (OCR) forecasts, with expectations that the Reserve Bank (RBNZ) could now announce three hikes this year.

Some aren’t ruling out the first of those coming as early as May.

But Kiwibank economists have warned that raising interest rates too soon could be “reckless” and “risks a repeat of past mistakes, potentially inducing a recession”.

Instead, they maintain a “wait and see” approach through most of this year.

The Kiwibank economists said New Zealand was likely to see a contraction in economic activity in the current quarter, though this won’t be played out in data for months to come.

“[The second-quarter Consumers Price Index] isn’t out until July, after the RBNZ’s decision, and to know if inflation sticks around, we really need to see Q3 data at the very least,” they said.