Photo: RNZ
Another bank has increased its fixed home loan rates, as pressure continues on wholesale rates.
Although the Reserve Bank cut the official cash rate at its most recent review, it was firmer than the market expected in its view that further reductions were unlikely.
That has prompted attention to turn to when rates might start to rise again, and wholesale interest rates to rise, which affects bank funding costs.
The one-year swap rate has lifted from 2.4 percent in late November to more than 2.7 percent.
The two-year rate has lifted from 2.5 to more than 3.1 percent.
Westpac increased some of its fixed home loan rates earlier in the week.
Now the Co-Operative Bank has said it will increase its two-year rate from 4.49 percent to 4.79 percent, its three-year rate from 4.79 percent to 5.09 percent, its four-year rate from 4.99 percent to 5.29 percent and its five-year rate from 5.19 percent to 5.49 percent.
Co-Operative Bank.
Photo: Supplied/Co-operative Bank
“Longer term fixed-rate mortgages are influenced primarily by wholesale interest rates and the future rate outlook, as opposed to the current OCR. The two- to five-year interest wholesale rates available to banks have increased by 0.5 percent to 0.6 percent since the last OCR change on 26 November, so people should expect longer term fixed rates to increase,” chief executive Mark 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 have had to start to increase our longer-term fixed home loan rates. However, we’ve reduced our short-term six-month rate.
“We’ve balanced these changes by also increasing term deposit rates, benefiting savers,” he said.
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