ASB is adjusting interest rates on loans and deposit accounts following the Reserve Bank Te Pūtea Matua’s announcement that it is increasing the official cash rate.
Kiwibank has joined ASB in announcing it will lift its variable home loan interest rates.
Both banks said the increases in their variable home loan interest rates were in response to the Reserve Bank Te Pūtea Matua’s increase in the official cash rate.
ASB said it would increase its floating rate home loan from 7.35% to 7.99% on December 7, while Kiwibank said it would lift its variable rate from 7% to 7.75% on December 5.
The rises compare to the increase in the official cash rate (OCR) by 75 basis points to 4.25% on November 23.
Earlier this week ANZ and Westpac increased home loan interest rates by up to 55 and 50 basis points respectively.
ASB said it would also increase some deposit rates, including increasing the interest it pays on its Savings Plus deposit account, and its children’s Headstart account from 2.8% to 3.55%, though the increase for the Savings Plus account won’t happen until January 1.
ASB also increased term deposit rates, including lifting the rate on its 36-month term deposit to 5.3%.
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“Following last week’s OCR change, many of our customers will benefit from higher deposit rates which will help those on fixed incomes with cost of living increases,” said Adam Boyd, ASB executive general manager for personal banking.
“We’ve also chosen not to pass through the full impact of the OCR increase for Back My Build loans. These customers are constructing new homes and have experienced rapid increases in building costs,” he said.
Kiwibank also planned to increase the interest it pays on its savings accounts and term deposits, with the changes to its term deposit rates kicking in immediately.
The bank’s 90-day term deposit rate for deposits of $10,000 or more went from 2.25% to 2.7%.
Rising home loan rates are putting pressure on household budgets, however, most households have the majority of their home loans on fixed rate terms.
Despite that, at the end of September, data from the Reserve Bank showed just over $39 billion of home loans were floating rate loans.
In September 2020, around $16 in every $100 owed on home loans was on floating rate loans, but by the end of September this year, that had fallen to just $9 as households sought to cope with rising repayment costs.
“We’re very aware of the effect of higher mortgage rates on many household budgets. I encourage anyone who may be concerned to get in touch,” Boyd said.
“Our team is available and standing by to provide guidance, advice and tools to support them.”
Banks say many households have also worked hard to get ahead on their home loans in a bid to reduce the impact of rising home loan rates.
— to news.google.com