Westpac blames higher wholesale funding costs for fixed-term mortgage rate hikes, introduces 12 month special

Westpac is increasing all bar one of its advertised fixed-term home loan interest rates on the heels of recent rises from rivals BNZ, ANZ and ASB.

Westpac has, however, introduced a "limited time special" 12 month rate of 4.94%.

Kiwibank currently has the lowest advertised one year rate at 4.89%, the Co-operative Bank's also at 4.94% and SBS Bank at 4.95%. And ASB has a 4.75% six month special and ANZ a 4.95% one year special.

Westpac's six month rate is being increased by 15 basis points to 5.40%, its 18 month rate by 35 basis points to 5.75%, its two year rate by 30 basis points to 5.95%, its three year rate by 46 basis points to 6.50%, its four year rate by 60 basis points to 6.90%, and its five year rate by 50 basis points to 7.10%.

The changes are effective from Friday, September 6. Westpac says all rates require at least 20% equity with the borrower having to take out a loan of at least $100,000. Borrowers with less than a 20% deposit will be charged low equity margins.

Ian Blair, Westpac's retail general manager, told interest.co.nz the increases followed rising wholesale funding costs over the past couple of months, with these having risen by up to 80 basis points at the five year end of the swap curve.

Blair said Westpac had decided on a 12-month special because there's "a bit more stability in the swap curve" at that duration, giving the bank flexibility to provide a slightly better rate.

"We're also seeing a lot of demand into that. Our customers are choosing that as the preferred rate at the moment for fixed rates, and so hence we're trying to give them an attractive offer at a term they seem to be keen on," Blair said.

Asked whether Westpac was prepared to offer any discounts on its new advertised, or carded, rates Blair said not on the 4.94% one year special, which he described as a "really hot rate."

"And the rest of the rates, we look at the customer's total business and then negotiate that with them individually," he said.

The one year special would be reviewed regularly and Westpac was "committed to maintaining it for as long as we can,” Blair added.

Overall, he said, the interest rate trajectory appeared to be up.

"It certainly appears if they (interest rates) have been going up. All the major banks have increased their longer term rates, the yield curve has gone out at the longer end as well, and the Reserve Bank has indicated, and the markets have certainly built in, an increase of the OCR in 2014."

See our story on ASB's recent moves here, and ANZ's recent moves here and BNZ's recent moves here.

See all advertised mortgage rates here.

	1 yr	2 yrs	3 yrs	4 yrs	5 yrs
	5.45%	5.95%	6.50%	6.90%	7.10%
	5.40%	5.95%	6.40%	6.80%	6.99%
BNZ	5.39%	5.95%	6.29%	6.60%	6.90%
Kiwibank	4.89%	5.50%	6.05%	6.30%	6.60%
	4.94%	5.65%	6.04%	6.30%	6.60%
from Sept 6 ...		5.95%	6.50%	6.90%	7.10%
Co-op Bank	4.94%	5.50%	5.95%	6.25%
HSBC Premier	4.99%	5.65%	6.05%	6.30%	6.60%
SBS / HBS	4.95%	5.45%	5.80%		6.29%
	5.25%	5.50%	6.05%	6.30%	6.60%

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