SBS Bank raised its long term mortgage rates by between 10 and 15 basis points (bps) on Tuesday morning, following moves by other banks over the past week. The moves contrast with expectations from some that the Reserve Bank will cut the overnight Official Cash Rate on Thursday by 25 basis points to 2.25%. Most economists expect the RBNZ to hold the rate at 2.5%. However, SBS also lowered its six month mortgage rate by 5 bps to 5.50%. SBS raised its two year mortgage rate by 10 bps to 6.35%; three year by 14 bps to 6.99%; and five year by 15 bps to 8.00%. It does not offer a four year rate. Long term mortgage rates in New Zealand are rising again because of the rise in international wholesale rates as governments around the world borrow more in efforts to stimulate their economies. This has raised concerns of inflation kickstarting again in the next couple of years, as shown by the recent rise in 5, 10 and 30 year US Treasury bond rates. See charts of Treasury bond yields below. SBS became the second bank in a week to raise its five year mortgage rate back to 8% this year, following ASB on Friday. However, ANZ and BNZ are offering 7.99%; and Kiwibank, TSB and National Bank are offering 7.95%. Westpac is currently the only major bank to have not raised long term mortgage rates in this latest round of moves, and is still offering a five year mortgage rate at 7.60%. HSBC is also offering 7.40%. See the latest rates on our mortgage rates page.
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