ASB and its subsidiaries Sovereign and Bank Direct have raised fixed mortgage rates across the board this morning in a sign that another round of rate hikes has begun.

The latest move includes a six month rate hike. Six month rates have generally been falling or static in recent weeks, along with variable rates, while longer fixed rates have been rising. See all mortgage rates here.

The latest move suggests six month rates may have reached their bottom as wholesale interest rates begin to rise amid talk the Reserve Bank of New Zealand may be forced to raise the Official Cash Rate earlier than the latter part of 2010, which it has been indicating since midway through the year.

Stronger than expected inflation figures on Thursday, and repeated signs of economic recovery, have pushed up wholesale interest rates, with markets now expecting the first RBNZ rate hike in January.

Here are the rate increases:
ASB:

- 6 month rate by 25 basis points (bps) to 5.75 per cent
- 1 year by 20 bps to 6 per cent
- 18 month by 20 bps to 6.6 per cent
- 2 year by 20 bps to 7.15 per cent
- 3 year by 20 bps to 7.95 per cent
- 4 year by 25 bps to 8.5 per cent
- 5 year by 15 bps to 8.75 per cent

ASB's fixed rates are now 5 to 35 basis points above those of its major rivals. Its standard one year rate is now the only one above 6 per cent.

Bank Direct raised its rates to the same levels as ASB's rates.

Sovereign:

- 6 month rate by 25 bps to 5.9 per cent
- 1 year rate by 20 bps to 6.15 per cent
- 18 month by 20 bps to 6.75 per cent
- 2 year by 20 bps to 7.3 per cent
- 3 year by 20 bps to 8.1 per cent
- 4 year by 25 bps to 8.65 per cent
- 5 year by 15 bps to 8.9 per cent

Sovereign also tightened some of its lending criteria from the start of September, with the margin between its and ASB's rates now 15 bps.


INTEREST.CO.NZ