Major bank lifts fixed mortgage rates, blames Middle East war

A major bank is raising its fixed home loan rates on terms of one to three years, blaming a jump in costs driven by renewed conflict in the Middle East.

Westpac NZ said the changes would take effect tomorrow, with its one-year advertised special rate (for those with minimum 20% equity) rising 0.20% to 4.99% per annum.

The 18-month and two-year special rates would each climb 0.26%, to 5.35% and 5.45% respectively, while the three-year special rate would edge up 0.06% to 5.35%.

The bank's six-month special rate was unchanged at 4.69%, and its four and five-year special rates were also held, at 5.39% and 5.49%.

Westpac NZ managing director of consumer bank and wealth Helen Ryder said, "re-escalating tensions in the Middle East have once again driven up wholesale interest rates, causing bank funding costs to rise".

"Most wholesale interest rates are now over 0.30% higher than they were a month ago, so with today's changes we are passing on some of those higher costs but also absorbing some," Ryder said.

The move comes just six weeks after the bank cut some longer fixed-term rates.

Ryder said: "Despite some upward pressure, we've kept our longer-term housing rates unchanged as we recognise some customers may be looking at the economic outlook and thinking about fixing for a longer period to get certainty over their loan repayments.

“We’re also working really hard to provide good value and options for savings customers, including a leading 9-month term deposit rate of 3.70% p.a.

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The bank was also raising some other term deposit rates, including its 18-month rate by 0.20% to 4.20% and its three-year rate by 0.10% to 4.40%.

“As always, we encourage people to talk to us sooner rather than later if they have any concerns about their money situation, so we can make a plan to help keep them on track.”