Could this be the end of ultra low fixed rate mortgages?

Home-owners could face rising interest rates in coming weeks. Photo/Michael Craig.

Kiwi mortgage holders may see an increase in longer fixed term rates over the coming weeks after the US Federal Reserve increased its cash rate from zero to 0.25 per cent today.

The US rate affects the cost of borrowing for New Zealand banks on the international markets.

Westpac currency strategist Imre Speizer said the 10 year swap rate had not moved at all after the announcement in the US today, which had been well-signaled to the market.

But since New Zealand's Reserve Bank cut the official cash rate to 2.5 per cent last Thursday the two year swap rate had risen from 2.7 per cent to 2.84 per cent.

"That's quite a big move for a swap market," he said.

Speizer said the rate had moved up because the Reserve Bank had signaled further cash rate cuts were unlikely.

"People who were betting on lower rates saw no reason to continue doing that."

The last time the two year swap rate was at 2.84 per cent was in August, he said.

If the higher rate was sustained it could feed through into bank mortgage rates.

Speizer said mortgage rates typically moved in the same direction as the swap rate.

Federal Reserve Chair Janet Yellen's Washington news conference is shown on a television screen on the floor of the New York Stock Exchange. Photo / AP

Massey University banking expert David Tripe said fixed rates of one year or more were those most affected by the US debt market.

While some New Zealand banks had a "bit of slack" in their mortgage rate pricing he said the ultra-low rate currently being offered by SBS bank at 3.99 per cent "might not be around much longer".

He said mortgage holders with large amounts of debt coming off a fixed rate should look to re-fix sooner rather than later.

It was up to individual banks whether they made the call to absorb the higher cost or pass it on to customers and competition also impacted on the decision, Tripe said.

But any change was likely to be at least 0.05 percentage points.