ASB first to lift interest rates

It's good news for those with money in the bank, but not so good for homeowners and others carrying debt.

ASB yesterday became the first bank to announce it would be raising its interest rates, following the increase in the official cash rate by 0.25 per cent last week.

The changes see variable home lending and savings account rates rise by the same amount, 0.25 per cent, bumping the bank's variable floating rate to 6 per cent.

ASB's six-month fixed lending rate also goes up 0.25 per cent to 6.10 per cent, while its one-year rate now stands at 6.45 per cent.

Those rates are effective from today for new customers and from July 5 for most existing customers.

Changes to the fixed lending rate are also effective from today for all new lending, while deposit rates are effective on June 25.

Chief executive customers, markets and products Catherine McGrath said it was a direct result of the OCR jump.

"The market is now entering a new cycle and we need to ensure our products are priced appropriately, based on our underlying costs. With this in mind, we have also increased a number of our deposit rates [yesterday] ensuring our savings customers see the benefit."

Ms McGrath said the increased rates also came after consideration of "wider market factors" and she reminded customers that ASB was the first to bring down its variable housing rate to 5.75 per cent last year - a figure which had remained unchanged since.

As it stands, variable floating rates for ANZ are 5.69 per cent, BNZ 5.99 per cent, Kiwibank 5.65 per cent and Westpac 6.29 per cent.

Kiwibank last night said it would not be jumping to put up its rates as a result of ASB's announcement, but acknowledged it would be considering options in the coming days.

Spokesman Bruce Thompson said: "We'll be keeping an eye on our competitors and how things will pan out but at this stage, no, we are not [planning to increase rates]."

BNZ stressed that it, too, was still looking at its options."No news yet, anyway," said a spokesman.

THE NEW RATES

ASB's new rates: (up by 0.25 per cent)
* Variable floating rate: now 6 per cent.
* Six-month fixed lending rate: 6.10 per cent.
* One-year fixed lending rate: 6.45 per cent.