New Zealand homeowners are facing another round of increased mortgage costs, as ANZ, the country’s largest bank, announced rate hikes across much of its fixed-term loan offerings. The move, effective tomorrow, follows similar decisions by Westpac and BNZ earlier this week, signaling a broader trend of rising interest rates for borrowers. This latest adjustment comes as wholesale interest rates continue to climb, driven in part by global economic uncertainties.
ANZ will increase rates on its 18-month to five-year fixed home loans by 20 basis points (0.20%), while the one-year rate will rise by 10 basis points. The bank’s six-month fixed rate special will remain unchanged. Specifically, the one-year special rate will increase to 4.59%, and the two-year special will rise to 5.09%. Standard rates will also see an increase, moving to 5.19% for the one-year rate and 5.69% for the two-year rate, according to ANZ.
The increases reflect a response to rising wholesale interest rates, according to Grant Knuckey, ANZ’s managing director for personal banking. “Since the fixed rate changes we made in February, wholesale rates have continued to rise across all terms,” Knuckey said. This follows a similar rationale provided by Westpac yesterday, which also increased its fixed home loan and term deposit rates, and BNZ earlier today, which announced rate increases on some fixed home loans.
Impact on Existing and Prospective Borrowers
While the rate increases will impact new borrowers, ANZ notes that a significant portion of its existing customers are still benefiting from lower rates secured earlier in the easing cycle. Currently, 78% of ANZ’s fixed home loans are on rates below 5%, a substantial increase from the end of 2024 when fewer than 10% of loans fell into that category. However, this benefit will diminish as those fixed-rate periods expire and borrowers refinance at higher rates.
The timing of these increases comes amid broader global economic concerns, including ongoing conflict in the Middle East and rising oil prices, both of which contribute to inflationary pressures and influence wholesale interest rate movements. These factors are creating a complex environment for both lenders and borrowers in New Zealand.
Term Deposit Rates Also Adjusting
In addition to home loan rate adjustments, ANZ also announced increases to some of its term deposit rates, ranging from 0.15% to 0.40% on terms of one year or longer. The bank’s three-year term investment rate now stands at 4.40%, an 18-month high. Short-term deposit rates for periods of 270 days or less remain unchanged. This move suggests banks are also looking to attract deposits in a higher-rate environment.
Broader Market Trends
The coordinated rate increases from major banks – ANZ, Westpac, and BNZ – indicate a broader shift in the mortgage market. The moves suggest lenders are anticipating continued upward pressure on wholesale funding costs and are proactively adjusting their rates to maintain profitability. The situation is being closely watched by economists and financial advisors, who are assessing the potential impact on household budgets and the overall economy.
Consumers are encouraged to review their financial situations and consider seeking advice from a financial advisor to understand how these rate changes may affect their borrowing capacity and repayment obligations.
ANZ will continue to monitor wholesale interest rate movements and adjust its offerings accordingly. The next scheduled update from ANZ regarding interest rates is not currently available, but the bank will likely respond to any significant shifts in the economic landscape.
Disclaimer: This article provides general information about interest rate changes and should not be considered financial advice. Consult with a qualified financial advisor for personalized guidance.
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