The NZ-owned bank also increases its new revolving credit home loan rate
Kiwibank has lifted its variable mortgage rates for new loans from 7.75% to 8.25%.
The New Zealand-owned bank has also raised the rate it charges on new revolving credit home loans from 7.8% to 8.3%, with the rises to existing loans to take effect starting May 8.
Unlike Kiwibank’s ordinary variable-rate loans, which have fixed repayment schedules, a revolving credit variable-rate loan enables borrowers to re-borrow the money they pay off their loan, Stuff reported.
On April 5, the Reserve Bank of New Zealand hiked the OCR for the 11th straight month, from 4.75% to 5.25%, as part of its continued fight against inflation. The surging OCR has led to the increase in bank home loan rates, squeezing indebted households’ ability to spend.
Kiwibank increased the rates on its fixed-rate home loans on April 18.
But economists said there may not be much further for the cash rate to rise.
Last week, official figures showed a decline in the rate of inflation, indicating that the OCR was near its peak, economists said.
In the three months to March, inflation sat at 6.7%, which was significantly lower than what the market and the Reserve Bank predicted.
Annual inflation has plunged to 6.7%, after prices climbed a mere 1.2% in the three months to the end of March.
RBNZ had been expecting annual inflation to increase, from 7.2% in the December quarter, to 7.3%,
According to economists, the drop in inflation was entirely because of the influence of imported inflation, including fuel prices.
Kiwibank’s variable loan rate hike followed similar moves from many other banks.
ASB recently moved its rate to 8.39% to bring it into line with ANZ and Westpac, which raised their rates earlier this month following the OCR hike.
TSB has raised its variable rate to 9.19% but continued to charge 8.39% for borrowers with at least 20% equity.
SBS lifted its rate to 8.49%.
BNZ, which according to mortgage advisers had been aggressively working to increase its market share, continued to charge 7.74% for its variable rate home loans.
Rising home loan rates are being blamed for the increase in households falling into arrears on their home loans.
At the end of February, borrowers had missed payments on 18,900 mortgages – up from 18,400 the previous month, Stuff reported.
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