Home Loan Hike: Kiwibank Joins Major Rivals in Lifting Long-Term Rates
By Lions Roar News Business & Finance Desk
AUCKLAND, NZ – The “Big Five” banks have completed a sweep of interest rate hikes this week as Kiwibank followed in the footsteps of its Australian-owned rivals, pushing longer-term fixed home loan rates higher across the board.
Kiwibank, ASB, and BNZ have all adjusted their lending portfolios, citing a sharp rise in wholesale funding costs following the Reserve Bank of New Zealand’s (RBNZ) hawkish monetary policy update in November. While longer-term borrowers face higher costs, some relief has been offered to those looking for short-term fixes.
📉 The Rate Shake-Up: Who is Charging What?
The movement follows similar hikes from ANZ and Westpac earlier this month. Here is how the latest adjustments break down:
Kiwibank Adjustments
The state-owned lender lifted its special 2-to-5-year fixed rates by between 20 and 30 basis points.
- The Silver Lining: Kiwibank bucked the trend for short-term borrowers, lowering its six-month rate by 16 basis points to 4.59%.
- Standard Rates: For those with less than 20% equity, standard rates also climbed by 20 to 30 basis points.
BNZ & ASB Changes
- BNZ: Increased its fixed terms by 19 basis points (for 18-month terms) up to 30 basis points for 3, 4, and 5-year terms. Its two-year rate now sits at 4.69%.
- ASB: Matched the market with increases of 20 to 30 basis points, pushing its two-year rate to 4.75%.
Note for Savers: ASB’s Executive General Manager of Personal Banking, Adam Boyd, noted that while lending costs are up, term deposit rates have increased by up to 35 basis points, offering a rare win for savers.
🏦 The “Wholesale” Blame Game
Banks are pointing squarely at the wholesale swap market for the increases. The two-year swap rate—a key indicator of what it costs banks to borrow money—jumped from 2.54% in October to a peak of 3.09% on December 15.
Financial markets shifted aggressively after the RBNZ indicated that further OCR cuts were less likely than previously thought. Interestingly, markets are currently pricing in rate hikes as early as the second half of 2026, despite the RBNZ’s own projections suggesting no hikes until 2027.
🏛️ RBNZ Steps In to “Cool” the Market
The volatility prompted a rare intervention from Reserve Bank Governor Anna Breman. In a move designed to settle jittery markets, Breman stated that financial conditions had tightened “beyond” what the RBNZ had projected.
“Financial market conditions have tightened since the November decision, beyond what is implied by our central projection for the OCR,” Breman said.
While her statement successfully nudged wholesale rates slightly lower, they remain significantly higher than they were prior to November. Some economists suggest the market reaction was “too extreme” and that rates could soften again in early 2026 if inflation continues to behave.
🧭 Borrowers Pivoting to Certainty
As rates climb, consumer behavior is shifting. ANZ, New Zealand’s largest bank, reports a surge in customers requesting to switch from floating rates to fixed ones. This suggests that Kiwis are looking to “lock in” their costs before any further surprises in 2026.
Notably, none of the major banks have significantly altered their one-year rates, which remain the most popular choice for New Zealanders hoping for a market correction in the near future.
