Home loan rates rise in rush to fix

Fixed mortgage rates have been driven higher this week, largely because of a stampede of homebuyers convinced recent low levels were soon to rise, industry figures say.

But the cost of the 30 to 40 per cent of the funding banks raise overseas is also adding to the pressure.

ANZ National, New Zealand's largest bank, yesterday raised fixed rates for the second time in less than a week, lifting its two-year rate by 0.6 percentage points to 6.75 per cent and its five-year rate by 0.75 percentage points to 7.5 per cent.

On top of increases on Monday, the two rates have gone up 0.76 percentage points and 1 percentage point respectively in five days.

ANZ National's rivals have also increased fixed rates in recent days.

Only a couple of weeks ago, many commentators including bank economists were predicting longer-term rates would remain low.

"It's a challenge in terms of the outlook for homeowners or potential borrowers who were looking to lock in a long-term rate," said BNZ's general manager of strategy and marketing, Blair Vernon.

To read the full NZ Herald story click here.

Posted: 28 Mar 2009

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