ANZ, Westpac hike key mortgage rates as RBNZ kills talk of more cuts

New Zealand’s biggest bank has joined rivals in lifting most fixed‑term home loan rates, even as it trims short‑term specials in response to rising wholesale funding costs.

ANZ is increasing its 18‑month and two‑year fixed home loan rates by 20 basis points, while its three‑, four‑, and five‑year terms will rise by 30 basis points. The bank will simultaneously cut its six‑month special rate by 10 basis points to 4.69%, the lowest level since June 2022. A one‑year fixed‑rate special remains at a three‑year low of 4.49%, 1News and RNZ reported.

ANZ personal banking managing director Grant Knuckey (pictured left) said the moves reflect a sharp lift in funding costs. 

“Since our last fixed rate reduction on October 17, wholesale interest rates have risen significantly, increasing by 33 to 77 basis points for terms 12 months and longer," Knuckey said.

The changes, which take effect today for ANZ’s fixed home loan and term deposit products, mirror similar moves last week from Westpac. 

Westpac hiked its two‑ to five‑year fixed mortgage rates by 30 basis points, while slashing its six‑month special by 20 basis points to 4.69%.

“We're holding back some of the increase in wholesale borrowing costs to customers, while also offering great value for those looking for short-term flexibility with our new six-month advertised special rate,” said Westpac marketing managing director Sarah Hearn (pictured right).

RBNZ pushes back on market bets for more easing

The repricing comes shortly after the Reserve Bank cut the official cash rate to 2.25%, while signalling it is likely on hold for some time.

Although the central bank eased policy at its last review, it made it clear it did not think another cut was likely. Markets had previously almost completely priced in another reduction and were forced to reverse those bets.

In a statement, Governor Anna Breman said the forward path for the OCR published in the November Monetary Policy Statement indicated “a slight probability of another rate cut in the near term”. However, she added that “if economic conditions evolve as expected, the OCR is likely to remain at its current level of 2.25% for some time." 

Breman noted that “financial market conditions have tightened since the November decision, beyond what is implied by our central projection for the OCR,” and stressed that the Monetary Policy Committee is not on a preset course. 

“This is why the MPC meets seven times a year to assess the latest economic conditions and forecasts.”

Borrowers face tougher choices heading into summer refixes

For borrowers, the mix of higher longer‑term fixed rates, cheaper six‑month specials and a central bank trying to anchor expectations is adding complexity to refixing decisions.

Simplicity chief economist Shamubeel Eaqub said the shifting signals make it challenging for households to plan. 

“It creates great urgency just as people are preparing to knock off for the summer,” Eaqub told RNZ.

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