Five major banks now hiked rates in just over a week, but Kiwibank stays cheapest on one and two-year terms
Kiwibank has become the last of the big five banks to lift fixed mortgage rates in the space of just over a week, closing out a rapid round of repricing that leaves borrowing costs higher across nearly every term — though Kiwibank continues to offer some of the sharpest pricing on shorter fixes, interest.co.nz, Stuff, and RNZ reported.
A five-bank domino effect in ten days
Kiwibank's move follows Westpac, ANZ, BNZ, and ASB, who have all lifted rates over the past 10 days
As interest.co.nz put it, "none of these big five banks have staked out a rate-competitive position with these shifts. It is only about 'recovering' wholesale money market costs."
Effective Monday, Kiwibank's special one-year rate rose from 4.75% to 4.95%, its two-year rate lifted from 5.19% to 5.39%, its six-month rate increased from 4.65% to 4.75%, and its three-year rate rose from 5.39% to 5.49%. Standard rates for borrowers without 20% equity increased by similar margins across the same terms, while four and five-year special rates were left unchanged at 5.59% and 5.69% respectively.
Kiwibank still undercuts rivals on shorter fixes
Despite the increases, Kiwibank hasn't lost its competitive edge everywhere. Chaston noted that Kiwibank's one-year fixed rate now sits four basis points below any of the big four banks, and its two-year rate is six basis points lower than most, while its three-year rate is now six basis points above Westpac's, making Westpac the cheapest of the group on that term.
The bank also lifted three term deposit rates — the six-month rate by 5 basis points to 3.50%, and the nine-month and two-year rates by 15 basis points to 3.70% and 4.30% respectively — a move interest.co.nz described as defensive.
"It is a defensive move aimed at not losing deposit flows, rather than growing them," the publication said.
What it means for borrowers and advisers
For first-home buyers and property investors weighing fixed versus floating options, the round of hikes narrows the gap between major lenders without materially shifting the overall picture — wholesale funding costs, not competitive positioning, are driving the moves. Borrowers with maturing fixes may still find sharper deals at smaller lenders.
As interest.co.z noted, "you can still get lower rates from the challenger banks, especially the Chinese ones," while banks like SBS and TSB remain less exposed to swap rate shifts, since their funding costs depend more on deposit rates than wholesale markets.
Advisers may also have room to push back on behalf of clients, since how flexible banks are prepared to be "will depend on the strength of your financials."
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