Business journalist Jamie Gray explains the Reserve Bank’s decision to raise the official exchange rate to 2.5%. Video / Cameron Pitney
ASB and Kiwibank both raised mortgage and deposit rates today in response to the latest official Reserve Bank cash rate hike.
ASB’s variable housing rate will drop from 5.85% to 6.35%, effective July 20 for new loans and July 27 for existing customers.
Its Orbit home loan rate will drop from 5.95% to 6.45%.
The bank announced that it was raising the maximum interest rate on its Savings Plus deposit account from 1.25% to 1.75%.
ASB’s term deposit rates across the board will also increase, with their 18-month term rate rising to 4.00%, the highest rate in the market.
“Today’s savings deposit rate increases are good news for customers and we hope the changes help them get closer to their financial goals,” said Adam Boyd, executive general manager of banking services. ASB staff.
The variable rate on Kiwibank home loans will increase from 5.50% to 6.00%.
The new rates will take effect July 18 for new loans and August 1 for existing loans.
The Kiwi-owned bank’s online savings deposit rate will drop from 1.30% to 1.60%.
Its deposit with 90 days notice will increase from 2.50% to 2.85%.
“We are delighted that our home loan rates remain very competitive. Over the past two years we have consistently had one of the lowest variable rates in the market,” said Richie McLay, Kiwibank Senior Director – Savings and loan.
Yesterday, the Reserve Bank raised the OCR by 50 basis points to 2.5%.
This is the third consecutive 50 basis point increase as the Reserve Bank seeks to rein in rising inflation.
The OCR fell from its record low of 0.25% at the start of 2020 after the Reserve Bank cut its benchmark interest rate amid fears of recession following Covid-19.
And more rate hikes are widely expected.
The Reserve Bank said its monetary policy committee had agreed that it remained appropriate “to continue to tighten monetary conditions at pace to maintain price stability and support maximum sustainable employment.”
“The level of global economic activity, combined with ongoing supply disruptions largely due to both the persistence of Covid-19 and the Russian invasion of Ukraine, continues to generate global inflationary pressures” , the bank said.
New Zealand’s annual inflation rate hit 6.9% for the year to March, the biggest move since 1990.