ASB and Kiwibank hike fixed rates as funding costs climb
Major banks are lifting fixed mortgage rates even though the Reserve Bank has left the official cash rate unchanged, with lenders pointing to surging wholesale funding costs linked to the conflict in the Middle East, rising oil prices, and renewed inflation worries.
ASB and Kiwibank are the latest to move, following earlier hikes from ANZ, Westpac, and BNZ.
Kiwibank has increased its special one‑year rate for borrowers with at least 20% equity from 4.49% to 4.59%, with its three‑, four‑ and five‑year terms all up 10 basis points to 5.35%, 5.79% and 5.89% respectively. ASB has lifted its two‑ and three‑year fixed home loan rates by 14 and 20 basis points to 5.09% and 5.39%, while trimming its six‑month rate by 10 basis points to 4.49%, 1News, RNZ, and interest.co.nz reported.
Term deposit sweeteners signal higher long‑term funding costs
At the same time, banks are sharpening term deposit offers to attract funding, with implications for both borrowing capacity and investment decisions.
Kiwibank has raised one‑year deposits by 20 basis points to 3.75%, and pushed three‑ to five‑year terms up to between 4.4% and 4.7%. ASB has lifted term deposits by up to 50 basis points across 12‑month to five‑year terms, including a five‑year rate of 5%.
Interest.co.nz notes that “5% rates by any bank for any term is a level worth noting” and suggests this “may however signal that higher long term fixed home rates are on the way.”
For property investors, 5%‑plus term deposit returns increasingly challenge net yields on residential rentals, particularly where mortgage rates are rising and rents are softening in some markets.
Volatile wholesale markets shift adviser conversations
Adam Boyd, ASB’s executive general manager personal banking, said wholesale markets were driving the repricing.
“Wholesale interest rates have remained volatile and continue to trend higher,” Boyd said. “These movements reflect heightened global economic uncertainty and renewed pressures across global markets.”
He added that “for savers, the same environment means stronger returns, and it's worth considering how your money could work harder,” but acknowledged that “any increase to home loan rates is significant for households.”
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