First rise in a bank variable rate in 2½ years on the back of strong Auckland developer demand; seeks more funding with TD hike

For the first time in two and a half years - since March 2011 - a bank has changed its variable mortgage rate.

Auckland-based Kookmin Bank has announced it is changing its floating rate, raising it to 6.24%, up 35 bps from 5.89%.

At the same time, it has raised its 2 year fixed mortgage rate to 5.99%, up 10 bps from 5.89%.

These changes come as rate curves steepen in the New Zealand mortgage market, meaning fixed rates are now rising faster at the long end than short rates. Over all banks, the two year fixed rate is now higher than floating rates, something that has not been the case in more than a year.

Kookmin has been growing its New Zealand residential mortgage book over the past year strongly. It is up 37% in the year to June 2013, the last data available, and now stands at NZ$67 million. Their corporate lending book is now more than NZ$127 million

Driving the residential mortgage book rise has been expanded lending to developers for residential construction loans, a Kookmin spokesperson has told interest.co.nz.

They say the rise in their variable mortgage rate is because of two factors; higher funding costs, and the opportunity to match the market now that discounting by others is less.

Loan demand is strong, says Kookmin, and to support this demand they are seeking more local deposits by offering a new higher one year term deposit rate of 4.4% for balances of $50,000 or more, and 4.5% for deposits exceeding $500,000. These are 20bps increases.

Kookmin Bank operates one branch in New Zealand, which was first registered to operate here by the RBNZ in July 1997.

See all carded mortgage rates here.