Kiwibank joins others in hiking lending rates

10.15am

State-owned Kiwibank today joined other banks in hiking its floating mortgage rate.

Kiwibank lifted its rate from 6.95 per cent to 7.2 per cent, maintaining its margin over other banks.

Yesterday, ASB and Westpac raised their rates to 7.75 per cent from 7.5 per cent.

Westpac said the move, in response to last week's move by the Reserve Bank to hike the Official Cash Rate to 5.5 per cent, added $24.50 to a monthly payment on a $150,000 mortgage on a 25 year term.

Some economists are forecasting another rate rise in June which would push mortgage rates to 8 per cent. With an annual inflation rate of just 1.5 per cent, New Zealand has among the highest real interest rates in the Western world.

ANZ and its fully owned unit, National Bank have yet to move on their rates which are at 7.5 per cent. KPMG's annual bank sector survey yesterday showed this group combined had over 40 per cent of the mortgage market.

Westpac lifted its fixed rates slightly for terms from six months to two years -- to around 7 per cent -- a notch higher than other banks.

Kiwibank lifted six month and one-year fixed rates this week as well.

Harcourts New Zealand chief executive Bryan Thomson said yesterday that the strength of the housing market would depend more on the job market than rising interest rates.

"It's a very small negative in a market with a whole lot of positives," he said.

- NZPA