ANZ hikes short term mortgage rates, including 6 month

ANZ has this morning raised its six month, one and two year mortgage rates by around 25 basis points (bps) as the latest round of hikes shows fixed rate mortgages across the board have bottomed and are on their way up again. This follows a similar move by ASB around a week ago. ANZ raised its six month rate by 24 basis points to 5.99%; its one year rate by 25 bps to 6.2%; and two year rate by 26 bps to 7.25%. ANZ left its 18 month rate unchanged at 6.69%. See and compare all mortgage rates here. ANZ also left its variable mortgage rates unchanged. Variable rates are expected to stay low into 2010 as the Reserve Bank of New Zealand (RBNZ) keeps the Official Cash Rate (OCR) on hold at 2.5% until 'the second half of 2010'. However, fixed rates are rising as banks forecast hikes in the OCR from around the middle of next year as the economy recovers and consumers begin to spend more. Banks are also fighting hard for local term deposits which is driving up interest rates. This follows new bank funding guidelines from the Reserve Bank released mid-way through this year. Banks are being required to raise more funds locally and for longer terms, which has put upward pressure on both term deposit and mortgage rates. See Roger J Kerr's analysis on the RBNZ's new bank funding policy here. Bernard Hickey also talks about this subject in the NZHerald. The latest moves have led to an increasingly 'positive' yield curve for mortgage rates, where longer term rates are higher than short term and variable rates. This is the opposite to what was seen over most of the last decade and is likely to increase the potency of the Reserve Bank's Official Cash Rate as future changes will flow through faster to the housing market because more borrowers are likely to choose the cheaper variable rates than the longer term fixed rates.