The latest wave of interest rate rises have come in for criticism, with banks accused of being "up to their old tricks".
The comments come from a banker turned mortgage broker, David Cunningham. They follow mortgage rate rises announced by ANZ, though other banks have made similar moves.
Cunningham says the rises are allowing banks to increase their profit margins.
Cunningham once headed the Co-operative Bank and now runs the mortgage brokerage Squirrel. He stresses his comments are his own opinion, not those of his employer.
"The banks are up to their old tricks this week, once again lifting mortgage interest rates," he says.
"The announcements come hot on the heels of news, just last week, that inflationary pressures are easing – a clear sign that all the rate hikes we’ve had to date are working exactly as they need to."
"They also come at a time when the Reserve Bank has seen fit to hold off on any further Official Cash Rate (OCR) hikes for several months, and with New Zealand already in the thick of a cost-of-living crisis."
Cunningham queries whether recent increases in wholesale swap rates and other underlying costs of funds are sufficient to explain the rises in retail rates.
So he produces a chart which he says shows this argument doesn't quite work.
The chart uses a popular one-year home loan product and tracks it against one-year wholesale interest rates.
"As you can see, the one-year wholesale interest rate has barely moved since 24th May, when we had our last OCR hike," Cunningham says.
"And yet, since then, banks have lifted their one-year fixed home loan rates by about 0.5%. That’s equivalent to a 50-point OCR hike!"
Cunningham concedes that unlike the wholesale rate, term deposit rates have risen in that time, but they did so at a lesser rate than the one-year home loan rate.
And he says there has been a similar process with term deposit rates, which have lifted over the same period, but again, by a lower rate.
"For ANZ in particular, the reality is richer still, given their one-year home loan rate has just risen to 7.39%, while its one-year term deposit rate sits below the market average, at 6.1%."
"While the rest of us suffer a cost-of-living crisis, ANZ (and the other banks) continue to celebrate a profitability bonanza. Fair? You be the judge," Cunningham says.
In a statement, ANZ says it constantly reviews its deposit rates to ensure it provides a balanced approach to managing interest margins and product pricing.
It adds the timeframe chosen for interest rate comparisons can give differing impressions.
Since October 2021, ANZ had increased its one-year term deposit by 4.7% buts its one-year home loan by a lower amount, 4.6%.
"Rates are influenced by many factors, and therefore looking at shorter time frames does not always paint the most accurate picture," ANZ says.
"When reviewing interest rates, we consider a range of factors, including the impact on customers, the underlying cost of funds and competitor activity."
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