Business reporter Jamie Grey explains the Reserve Bank’s decision to lift the Official Cash Rate to 2.5 per cent.
Video / Cameron Pitney
ASB and Kiwibank have both lifted their mortgage and deposit rates today in response to the Reserve Bank’s latest official cash rate hike.
ASB’s housing variable rate will move from 5.85 per cent to 6.35 per cent, effective from July 20 for new lending and July 27 for existing customers.
Its Orbit home loan rate will increase from 5.95 per cent to 6.45 per cent.
The bank said it was lifting the maximum interest rate on its Savings Plus deposit account from 1.25 per cent to 1.75 per cent.
ASB’s term deposit rates across the board will also increase, with their 18-month term rate moving to a market-leading 4.00 per cent.
“Today’s increases to savings deposit rates are good news for customers and we hope the changes will help them get closer to their financial goals,” Adam Boyd, ASB’s executive general manager personal banking, said.
Kiwibank’s variable home lending rate will move from 5.50 per cent to 6.00 per cent.
The new rates will come in on July 18 for new lending and August 1 for existing lending.
The Kiwi-owned bank’s online call saving deposit rate will jump from 1.30 per cent to 1.60 per cent.
Its 90-day notice saver deposit will increase from 2.50 per cent to 2.85 per cent.
“We are pleased our home lending rates remain very competitive. Over the past two years we’ve consistently had one of the lowest variable rates in the market,” Kiwibank’s senior manager – savings and borrowing, Richie McLay said.
Yesterday the Reserve Bank lifted the OCR by 50 basis points to 2.5 per cent.
The increase is the third 50 basis point rise in a row as the Reserve Bank looks to get rising inflation under control.
The OCR has been rising from its record low of 0.25 per cent in early 2020 after the Reserve Bank slashed its benchmark interest rate amid recession concerns in the wake of 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 the ongoing supply disruptions largely driven by both Covid-19 persistence and the Russian invasion of Ukraine, continues to generate global inflation pressures,” the bank said.
New Zealand’s annual inflation rate hit 6.9 per cent for the year to March, the largest movement since 1990.