Banks climb on rate rise bandwagon

Major lenders have started to raise mortgage interest rates following the Reserve Bank's decision to lift the Official Cash Rate.

HSBC yesterday lifted its floating interest rate 30 points to 9.25 per cent, which was more than the 25-point increase announced by Reserve Bank Governor Alan Bollard on Thursday.

At least two major banks have lifted their rates, with others widely tipped to follow next week. Westpac has raised its floating rate 25 points to 9.3 per cent, although it does not take effect for existing customers until November 21. The new rate applies to new customers on Monday. The bank's fixed rates remain the same.

The National Bank kept its floating rate at 9 per cent, but made small increases to its fixed rates. One- to four-year fixed rates are up 0.05 per cent, while a six-month fixed term was raised 15 points. One-year fixed rates stood at 8.25 per cent.

BNZ and ANZ said they were reviewing their rates.

The Real Estate Institute, meanwhile, has thumbed its nose at Dr Bollard, saying the rate rise is unlikely to curb house prices.

Dr Bollard said the buoyant housing market had fuelled an unsustainable household spending spree.

But institute vice-president Murray Cleland said Official Cash Rate rises over more than a year had had no effect on house prices because demand was outstripping supply.

"The suggestion that the OCR increase is in response to 'persistent buoyant housing activities and related consumption' tends to overlook the fact that speculative expectations are not the primary reason for house price rises."

- additional reporting NZPA