ASB and Westpac lift home loan rates following Reserve Bank OCR hike
Friday, 25 February 2022
ASB and Westpac will lift their home loan interest rates following the Reserve Bank Te Pūtea Matua’s 0.25 per cent increase in the official cash rate.
ASB will also lift its deposit rates, but by a smaller amount.
ANZ announced increases to its home loan rates on Thursday after the Reserve Bank raised the OCR to back to 1 per cent on Wednesday in a bid to dampen inflation.
ASB said it would lift its floating rate home loan from 4.6 per cent to 4.85 per cent, while its Orbit home loan rate will rise from 4.7 per cent to 4.95 per cent.
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But while those rates will rise by the full 25 basis points of the official cash rate (OCR) increase, the maximum interest rates on ASB’s Savings Plus and Headstart deposit accounts will only increase from 0.65 per cent to 0.75 per cent.
The new floating rates take effect from March 2 for new loans, while ASB’s current borrowers will see their loan costs increase on March 9.
ASB’s new deposit rates will take effect on March 1.
Westpac will increase its floating rate home loans rates by 0.15 percentage points on March 14.
It will lift the maximum interest that can be earned on its savings accounts by the same amount on February 28.
It follows ANZ’s move on Thursday to lift rates on floating and flexible home loans 25 basis points, to 5.04 per cent and 5.15 per cent respectively. ANZ’s business floating and overdraft rates will also rise by the same amount.
The Reserve Bank now expects the OCR to peak at about 3.4 per cent by late 2024 to tackle inflation, which will result in more home loan rate increases for borrowers.
It had previously expected it to reach only 2.6 per cent.
Rising home loan rates are expected to result in drops in house prices.
Governor Adrian Orr acknowledged the housing market was already softening, and the committee thought higher interest rates were “consistent with house prices becoming more sustainable”.
“The committee acknowledged that some recent, more highly-leveraged borrowers may be financially stretched in a higher interest rate environment,” he said.
ANZ chief economist Sharon Zollner said, under the Reserve Bank’s predicted scenarios of a house price drop of 5.4 pert cent, pockets of negative equity would be limited.People who borrowed heavily for properties such as apartments might be more exposed, she said.