Clients face higher fixed rates but stronger term deposit returns
Westpac NZ has confirmed increases to most of its fixed home loan and longer-term deposit rates, citing a sharp rise in wholesale funding costs.
From Wednesday 18 March, Westpac will lift fixed home loan and term deposit rates on terms of one to five years, with moves ranging from 10 to 30 basis points. Six‑month mortgage and short‑dated deposit rates are unchanged.
Wholesale funding squeeze feeds through to borrowers
In a media release, Sarah Hearn (pictured), Westpac NZ managing director of product, sustainability, and marketing, said the bank has been forced to respond to a marked shift in wholesale markets.
Longer-term wholesale rates “have increased significantly in recent weeks, driving up funding costs for lenders,” Hearn said.
Special fixed home loan rates for owner-occupiers will now start at 4.59% for one year, stepping up to 5.19% for two years and 5.59% for five years. Standard carded rates will run from 5.19% for one year through to 6.19% for five years.
Independent commentary from interest.co.nz notes that the rise in wholesale swap rates is visible in market pricing and represents “costs no bank will be able to ignore.” That suggests other major lenders may follow with similar fixed rate adjustments.
Savers see better term deposit options
While higher funding costs are negative for borrowers, Westpac is also passing through some of the benefit to savers. One to five‑year term deposit and Term PIE rates will rise by between 10 and 30 basis points, with the new one‑year term deposit rate of 3.75% described as “the highest rate of any main bank for that term.”
Hearn said that “in an environment of rising interest rates, it’s a good time to set financial goals and plan how to achieve them,” encouraging both borrowers and savers to seek advice.
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