Westpac is the second major bank this week to lift its mortgage rates ahead of another expected Reserve Bank rate hike next month.
The bank followed the lead of ASB earlier this week in lifting its short-term home loan rates, while dropping its long-term rates.
Westpac has lifted its fixed term six-month and one-year rates by 10 basis points to 6.59 per cent.
Its 18-month and two-year home loan rates will also rise 10bp to 6.69 per cent and 6.79 per cent respectively.
Westpac’s four and five-year fixed-term mortgage rates will drop 10bp to 6.59 per cent and 6.49 per cent respectively.
But ASB’s hikes were larger, with the bank increasing its six-month fixed rate 34bp to 6.84 per cent, and its one-year rate 30bp to 6.84 per cent also.
Meanwhile, ASB’s three-year, four-year and five-year fixed home loan rates all fell, with the latter being the largest drop at 50bp to 6.49 per cent.
While the news of increasing mortgage rates won’t be welcome for many homeowners, economists this week signalled inflation may have peaked after “encouraging” inflation data was revealed.
The consumers price index increased 7.2 per cent in the 12 months to December 2022, according to Stats NZ.
That followed a 7.2 per cent annual increase in the September quarter, and a 7.3 per cent increase in the June 2022 quarter.
“Encouragingly, non-tradables inflation was flat at 6.6 per cent (year-on-year), below our forecast of 6.9 per cent, and the RBNZ’s 7 per cent expectation,” ANZ economist Finn Robinson said.
ANZ, Kiwibank and Westpac economists revised their official cash rate (OCR) outlooks down in response.
Both Westpac and ANZ said they now expected the Reserve Bank to raise the OCR by 50 points, instead of 75 points, to 4.75 per cent at the central bank’s next review on February 22.
The economists predicted the rate to peak at 5.25 per cent – below the 5.5 per cent peak the RBNZ forecast in November.
Kiwibank economists expected the Reserve Bank to lift the OCR by 50 points in February, but now see it peaking at only 5 per cent.