Westpac is targeting its longer-dated mortgage rates. Photo / 123RF
Westpac is lifting its mortgage and term deposit rates, the third bank to do so this week.
It follows similar moves by ANZ, the country’s largest bank, and ASB, which both hiked their longer-dated mortgages.
Westpac said its standard fixed one-year home loan rate will increase six basis points to 7.85 per cent, effective from Friday.
The two, three and four-year fixed home loan rates will jump 20bp.
Its five-year fixed rate will also increase 26bp to 6.85 per cent.
A Westpac spokesperson said the changes reflected the continued volatility in the cost of funding lending to customers.
Westpac also lifted a swath of term deposit rates from six months to five years. Its two-year term deposit was bumped up 60bp to 6 per cent. The 18-month and three-year rates rose 30bp to 5.80 per cent and 5.50 per cent respectively.
Reserve Bank governor Adrian Orr told the Herald earlier this week he was comfortable with the extent to which banks had been raising their mortgage rates, noting banks had been responding to rising wholesale funding costs.
“So their cost of funding has been rising, and they are busy passing that on to those who are borrowing,” Orr said.
ANZ hiked its mortgages with durations of two or more years, with most increasing by 20bp.
Meanwhile, ASB announced it would lift its two-year rate by 10 points and its six-month, three-year, four-year and five-year rates by 20 points.
ASB’s two-year rate is now at 6.89 per cent – below ANZ’s special two-year rate of 6.99 per cent and its standard rate of 7.59 per cent.
Its three-year rate is at 6.69 per cent – on par with ANZ’s special but below its standard rate of 7.29 per cent.
Reserve Bank says leaving banks to their own devices hasn't worked.