The Co-operative Bank has become the second major lender to lift long-term mortgage rates in response to rising wholesale interest rates.
The bank’s six-month rate has dropped by 14 basis points (0.14%) to 4.65%, while two- to five-year fixed rates had risen by 30 basis points (0.30%). The two-year rate now sat at 4.79%, three years at 5.09%, four years at 5.29%, and five years at 5.49%.
Term deposit rates had also been lifted, with increases of 20 to 30 basis points on two- to four-year terms. The two-year deposit rate moved to 3.70%, three years to 4.00%, and four years to 4.10%.
Chief executive Mark Wilkshire said wholesale rates had jumped by 0.5% to 0.6% since the Reserve Bank’s last official cash rate (OCR) decision on November 26.
“Longer-term fixed-rate mortgages are influenced primarily by wholesale interest rates and the future rate outlook, as opposed to the current OCR,” Wilkshire said.
“As long-term wholesale rates have risen quickly in recent weeks, on the expectation we are around the bottom of the interest rate cycle, we’ve had to start increasing our longer-term fixed home loan rates. However, we’ve reduced our short-term six-month rate.”
Earlier this week, Westpac also raised its two-to five-year fixed rates by 30 basis points while cutting its six-month special rate to 4.69%, citing similar wholesale market pressures.
The Co-operative Bank continued to offer the lowest widely available floating home loan rate in the market, Wilkshire said, with about one-third of customers having part of their loan on a floating rate.
Meanwhile, the NZ Herald reported ASB is temporarily removing the discounts it offers some of its home loan customers. The bank isn’t offering discounts on any of its mortgage rates, except for its six-month and floating rates for now.