Westpac lifts fixed mortgage rates as wholesale costs jump on renewed conflict
Westpac has become the first bank to lift fixed home loan rates on terms of one to three years, citing a jump in costs driven by renewed conflict in the Middle East.
From Tuesday, the one-year advertised special rate rises 0.2% to 4.99% per annum, while the 18-month and two-year special rates each climb 0.26%, to 5.35% and 5.45% respectively, and the three-year special rate edges up 0.06% to 5.35%. The bank's six-month special rate is unchanged at 4.69%, and its four and five-year special rates are also held, at 5.39% and 5.49%, 1News, RNZ, and interest.co.nz reported.
The move comes just six weeks after Westpac cut some longer fixed-term rates, and follows a notable move up in the wholesale rate track over the past week or so, mostly on geopolitical influences. Two-year swap rates are now at about 3.45%, compared to just over 3% at the end of last month, and the official cash rate was also increased by 25 basis points this month.
Westpac NZ's managing director of consumer bank and wealth, Helen Ryder, said re-escalating tensions in the Middle East had driven the shift.
"Most wholesale interest rates are now over 0.3% higher than they were a month ago, so with today's changes we are passing on some of those higher costs but also absorbing some," Ryder said.
Despite some upward pressure, Ryder said Westpac had kept its longer-term housing rates unchanged as it recognised some customers may be looking at the economic outlook and thinking about fixing for a longer period to get certainty over their loan repayments.
Rivals expected to follow as rates realign
Westpac now has rates above its main rivals for terms of one year through three years, having previously moved broadly in line with them. This is being described as the first crack in the dam, with other local banks expected to follow given they face the same funding pressure, and likely to appreciate that someone else has moved first. It's a signal for brokers that the recent run of stable short-to-medium term rates may be ending, at least for now.
Savers see gains as bank sweetens deposit rates
Westpac has also raised its 18-month term deposit rate by 20 basis points to 4.2% and its three-year term deposit rate by 10 basis points to 4.4%, though it has left rates unchanged in the popular six-month to one-year range. The bank is also offering a leading nine-month term deposit rate of 3.7% per annum.
Ryder said the bank encouraged early conversations with customers concerned about the changes.
"As always, we encourage people to talk to us sooner rather than later if they have any concerns about their money situation, so we can make a plan to help keep them on track," she said.
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