Fixed mortgage rates on the rise

Westpac bank has increased its fixed mortgage rates just a day after rival bank ANZ lifted its rates.

Westpac said from today it would remove three special rates and increase its normal rates by between 9 basis points and 34 basis points.

The biggest rise is in its two-year rate which has risen 34 basis points to 6.29 per cent for those with at least 20 per cent equity and 6.89 per cent for those with less than 20 per cent equity.

Yesterday ANZ also lifted its fixed rates by between 9 and 34 basis points.

Its two-year fixed rates rose from 5.95 to 6.29 per cent for standard borrowers and from 6.45 to 6.79 for low-equity borrowers.

New Zealand home buyers had benefited from a period of stable and historically low interest rates over the last three years, an ANZ spokesman said.

But global and New Zealand economic conditions that influence the level of interest set by banks were constantly changing.

"The rising cost of funding (both customer funding through term deposits and wholesale funding) is increasing, and therefore we must increase our home loan interest rates to pass on this increased cost of funding," he said.

Asked if they planned to lift rates, both BNZ and ASB said their rates were under constant review.

BNZ currently charges 5.95 per cent for its standard two-year fixed rate for those with more than 20 per cent equity and 6.45 per cent for low-equity borrowers.

ASB also charges 5.95 per cent for a standard two years fixed mortgage but currently has a special rate per cent of 5.59 per cent for two years for those who take out a credit card and have their wages go into an ASB account.

Last week the Reserve Bank kept the official cash rate at 2.5 per cent but warned the rate would rise next year.

- By Tamsyn Parker of the NZ Herald

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