“The impacts from the conflict in the Middle East are still uncertain and we could still see some pressure on inflation on that score. The New Zealand dollar is also weaker than expected, raising import costs,” Knuckey said.
He said a higher proportion of customers are choosing certainty, opting to fix their loans at the moment.
It comes after Westpac announced it was lifting variable rates for all home and business loans, as well as its variable savings product Bonus Saver, by 25 basis points (bps) from next week – mirroring yesterday’s Official Cash Rate (OCR) increase.
The changes came into effect today for new customers and Thursday for existing customers.
The bank hasn’t shifted its fixed rates.
Westpac’s variable home loan rates will now start at 6.14% for its floating and offset products, and 6.24% for its everyday product.
The variable deposit rates for Westpac’s Bonus Saver will increase to 1.5%, while its Simple Saver product increases by 15bps to 0.2%. Westpac’s Notice Saver remains unchanged.
“We’ll continue working hard to support both borrowers and savers through an interest rate tightening cycle,” Westpac New Zealand managing director of product, sustainability and marketing Sarah Hearn said.
“The large majority of our home lending is on fixed terms, and there are no changes to any of our fixed rates today.”
Hearn said “a rising OCR will likely mean good news for savers”.
“We supported them through the last year by holding our Notice Saver unchanged even as the OCR fell. This proved highly popular with savers, and we think our 3% pa rate continues to offer great value.
“Overall, we’ve seen our customers cope well with the economic uncertainty of the past few months. However, we encourage anyone who’s concerned about their finances to come and talk to us, and so we can make a plan to support them.”
Meanwhile, ASB announced last week it has increased its variable home loan rates by 25bps, while savings on call and savings-plus products are going up by 15 and 20bps.
ASB’s executive general manager of personal banking Adam Boyd acknowledged interest rate rises can be difficult for households.
“We have also recently reduced some of our long-term fixed home loan terms by up to 30 basis points,” Boyd said.
“We encourage any customers feeling any pressure with their mortgages to get in touch with us early to work through options.
“We also know many customers will be working hard to build their savings, and these increases will help them with their goals.”
The moves come after ANZ cut some of its home loan and term deposit rates last month on the back of a fall in wholesale interest rates.
The move was in response to Westpac cutting its longer-term home loan fixed rates.
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