Two more banks raise longer term mortgage rates

Thursday, 18 December 2025

Samantha Hayes spoke to Westpac chief economist Kelly Eckholt why the bank has raised longer-term interest rates.

Two more banks have raised their longer term fixed mortgage rates, meaning all the big four banks have raised longer term rates in the past week or so.

BNZ and ASB announced new rates on Thursday, with ASB saying the move was in response to longer term wholesale rate movements.

The moves come after Westpac and ANZ both lifted longer term fixed rates.

On Thursday, ASB said it was lowering its 6 months rate 20 basis points to 4.65%, which the bank said was “market leading”.

Its 1-year rate was unchanged at 4.49%. The 18-month rate was up 20bp to 4.65%, 2-year rate up 26bp to 4.75%, 3-year rates up 30bp to 5.09%, 4-year rate up 30bp to 5.39%, and 5-year rate up 30bp to 5.45%.

BNZ said its 6-month rate was down 10bp to 4.69%, 1-year rate was unchanged at 4.49%, 18-month rate up 19bp to 4.64%, 2-year rate up 20bp to 4.69%, 3-year rate up 30bp to 5.09%, 4-year rate up 30bp to 5.29%, and 5-year rate up 30bp to 5.29%.

ASB also noted it had changed its fixed term deposit interest rates, with lower rates for terms of 1-3 months and rates rising for terms of 6 to 60 months.

BNZ and ASB announced on Thursday that they were lifting longer term mortgage rates, following recent rises by Westpac and ANZ.

The increase in longer term fixed mortgage rates come despite the Reserve Bank lowering the official cash rate (OCR) by a further 25bp to 2.25% in late November.

In its release, ASB said that while variable mortgage rates were connected to the OCR, fixed rates were more influenced by wholesale markets.

That was essentially the price banks paid to buy the money they lent out, ASB said.

“Right now, those wholesale costs are higher, which flows through to home loan rates on some terms.”

Reserve Bank Governor Dr Anna Breman said financial market conditions had tightened in recent weeks ‘beyond what is implied by our central projection for the OCR’.

The adjustments “reflect the reality of higher funding costs”.

The Reserve Bank noted the rising mortgage rates in a statement on Monday.

It quoted Governor Dr Anna Breman reiterating the Reserve Bank’s message from November that there was a slight probability of another OCR cut in the near term.

“However, if economic conditions evolve as expected the OCR is likely to remain at its current level of 2.25% for some time,” the statement said.

“Financial market conditions have tightened since the November decision, beyond what is implied by our central projection for the OCR,” Breman was quoted saying.

“As always, we are closely monitoring wholesale market interest rates and their effect on households and businesses.”