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Kiwibank has lifted its home loan rates, and expects other banks to follow.
Kiwibank has lifted its home loan rates.
It has lifted its one-year fixed-rate home “special” loan rate from 4.55% to 4.85%.
That’s a rate for borrowers with debts of less than 80% of the value of their homes.
Kiwibank has lifted its floating rate home loan from 5% to 5.5%.
READ MORE:
* Bank of New Zealand lifts home loan rates
* Kiwibank and BNZ follow other major banks in lifting home loan rates
* Kiwibank says reduced floating rates a good option for first-home buyers
The move comes as economist predict home loan rates to rise above 6% putting a strain on many households’ finances.
Richie McLay, Kiwibank senior manager for savings and borrowing, said: “While we are first to move on this occasion, we aim to remain competitive in the market so both our lending and savings customers are getting a fair deal.
“We know the low interest rate environment has been challenging for some customers who rely on returns from savings, the higher term deposit rates on offer provide a lower risk option for steady returns.”
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Kiwibank also lifted some of its term deposit rates with its 90-day term deposit rising from 1.1% to 1.25%.
Deposit rates remain firmly behind inflation of 6.9% eroding the value of people’s cash deposits.
The cost of living crisis has become a national political battleground, with National’s housing spokesperson Chris Bishop blaming economic mismanagement for the hit to borrowers as the Reserve Bank fights to control inflation.
“The latest analysis from the Reserve Bank will make for chilling reading for mortgage holders, with the central bank predicting the interest rate on one and two-year mortgages will hit 6 per cent next year,” he said.
“A household that has borrowed $700,000 would face annual interest costs of $42,000, meaning they would have to pay more than $800 a week before they even begin to reduce the actual loan.”
Jarrod Kerr, Kiwibank’s chief economist, said it appeared the RBNZ intended more rate rises in a bid to dampen inflation.
The official cash rate (OCR) is currently 2%, but Kerr said: “We expect a 50 basis point move in July and August (to 3%), followed by two 25 basis point moves to 3.5% by November.”
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Kiwibank chief economist Jarrod Kerr says the Reserve Bank intends to continue lifting the official cash rate, which will result in home loan rates going even higher.
He said the Reserve Bank was getting plenty of bang for buck, but predicted worse was to come for people with home loans.
“Mortgage rates have risen swiftly. And house prices are already down around 5% from their November peak on their way to a 10% correction by year end,” he said.
“Adding to the housing market correction, mortgage rates are soon to be above 6% with the delivery of expected hikes to come.”
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