ASB is the first of the major banks to increase its mortgage and term deposit rates.
The bank has lifted its fixed one-year rate by 0.36 percentage points, up from 2.19 per cent to 2.55 per cent per annum.
The two-year rate has gone from 2.59 per cent to 2.95 per cent as part of the update.
Meanwhile, the five-year rate has increased by 0.3 percentage points, lifting from 3.69 per cent to 3.99 per cent.
The 0.36 point shift in the two-year rate would equate to an additional $1824 per year ($152 per month) for a recent home buyer paying off an $800,000 mortgage across 30 years.
These changes precede the Reserve Bank's OCR announcement at 2pm this afternoon.
Most banks have forecast the OCR rate to lift from its current record low 0.25 per cent by November.
This shift from ASB also comes shortly before the release of inflation data, which is expected to show New Zealand costs rising at as much as 3 per cent - the highest figure in a decade.
ASB general manager of retail banking Craig Sims attributed the increase in interest rates to the robust New Zealand economy.
"While interest rates are now increasing, they remain at historically low levels," Sims said.
"We're mindful that some first home buyers, in particular, have only ever experienced the current low-rate environment. When we assess a home loan application we use a 'test rate' that is substantially higher than current mortgage rates to give customers the confidence they can continue to make payments if rates increase."
While the rising rates will come as bad news to homeowners, the flip side is that those with savings in the bank will be given a boost on their term deposits.
ASB has increased its six-month term deposit interest rate by 0.2 per cent, with the rate rising from 0.8 per cent to 1 per cent.
The biggest increase was for the three-year term deposit, which saw an increase of 0.3 per cent from 1.4 per cent to 1.7 per cent.
Sims encouraged customers to talk to the bank about what it has on offer at the moment.
"We're committed to offering innovative home lending products such as our 1.79 per cent variable Back My Build loan for customers building a new home, and helping customers budget with the comprehensive calculators and tools available on our website," he said.
"Whatever the market conditions, our focus is squarely on offering customers market-leading home lending products and leading customer experiences."
The announcement from ASB was followed by a Kiwibank statement confirming it would be increasing its its term deposit rate to 1.2 per cent from 0.8 per cent for its 200-day term.
"With a number of economists expecting interest rate increases in the future, our 200-day special will allow customers to re-assess their investment options in the New Year," said Kiwibank senior manager for borrowing and savings Richie McLay.
"This is a special limited time only offer that runs to Sunday 18 July," McLay said.
Asked whether Kiwibank would also be increasing its mortgage rates, a spokeswoman said the bank was currently reviewing its rates but would not make an announcement today.