More banks rush to raise mortgage rates

Home owners with mortgages are facing higher rates for longer term loans.

More retail banks today rushed to boost mortgage rates, continuing the squeeze on home buyers seeking longer-term loans.

The Bank of New Zealand said its fixed housing rates for 3, 4, 5, and 7 year terms were reflecting the rising cost of long-term funds. New Zealand banks are reported to be finding it increasingly expensive to make longterm borrowings offshore as lenders there contract to their "local" markets. This has shown up in rapid rises in longer-term fixed rates around the world as inflation risk rises while central banks print money.

"Continuing volatility in the offshore markets has caused costs for longterm funds to rapidly rise," said Blair Vernon, BNZ's general manager of strategy and marketing.

"These significant increases have been reflected in our longer term fixed oursing rates".

BNZ said its standard and Fly Buys rate had been fixed for three years at an annual rate 6.59 per cent.

But shorter term costs partly priced off domestic factors such as the official cash rate (OCR) had eased, and the six month fixed term "classic" rate had been dropped from 5.69 per cent to 5.49 per cent.

The ANZ/National Bank became the second bank - with Westpac - to lift its two-year mortgage rates in the past week.

ANZ/National said its new interest rates for fixed home, residential investment, and business equity were: 2 years 6.25 per cent (up 30 basis points) 3 years 6.75 per cent and 4 years 7.15 per cent (both up 60 basis points), and 5 years 7.5 per cent (up 75 basis points).

The bank has lifted some of its rates for the second time this week.

And industry website interest.co.nz styled the rush to lift mortgage rates as "March madness", noting that Kiwibank has lifted its five-year rate for the second time in a week: it has gone up a total of 76 basis points to 7.25 per cent to match other banks. Kiwibank's 3 year rate has been lifted 51 basis points to 6.5 per cent, and its 4 year loans by 66 basis points to 7.15 per cent.

- NZPA