Kiwibank drops two-year home loan rate as major banks raise interest rates

Kiwibank has bucked the trend and will drop its two-year home loan rate. Photo / Supplied

As the big four banks raised their home loan rates this week, Kiwibank has seized the marketing opportunity and will drop its two-year rate.

Kiwibank announced today its two-year fixed home loan rate will drop six basis points to 2.49 per cent per annum.

However, the bank is raising its variable home loan rate from 3.4 per cent to 3.75 per cent.

Steve Jurkovich, Kiwibank chief executive, said in the rising rate environment the bank was providing certainty to its customers.

"As a challenger we are providing Kiwis with a real alternative to the Australian-owned banks."

In response to rising inflation, ASB was the first to blink earlier this week, lifting its fixed one-year rate from 2.19 per cent to 2.55 per cent per annum.

Its two-year rate also rose from 2.59 per cent to 2.95 per cent.

ANZ, BNZ and Westpac followed suit today, announcing an end to the downward trend in interest rates.

ANZ lifted its one-year rate by 31 basis points to 2.5 per cent, its two-year rate by 31 basis points to 2.9 per cent and its three-year rate by 25 basis points to 3.24 per cent.

BNZ increased its one-year rate by 36 basis points to 2.55 per cent, its two-year rate by 40 basis points to 2.95 per cent and its three-year rate by 26 basis points to 3.25 per cent.

Westpac's one-year rate went up by 36 basis points to 2.55 per cent, its two-year rate by 30 basis points to 2.89 per cent and its three-year rate by 30 basis points to 3.29 per cent.

Other independents banks, TSB, the Co-operative Bank, SBS and Heartland have not yet lifted their mortgage rates. Neither have the smaller New Zealand providers HSBC and Bank of China.

This lift from the major providers comes in the same week as the release of inflation data, which has shown the cost of household essentials rising markedly by 3.3 per cent for the year so far - the biggest increase in 10 years.

The rise in interest rates will put added pressure onto homeowners.

For example, ASB's 0.36 point shift in the two-year rate would equate to an additional $1824 per year ($152 per month) for a recent home buyer paying off an $800,000 mortgage across 30 years.