Floating rates rise after official cash rate increase

Westpac plans to raise variable interest rates for borrowers and some savers following a recent official cash rate increase. The Reserve Bank of New Zealand recently raised the official cash rate by 25 basis points, bringing it to 2.75 percent. Westpac will increase its variable home and business lending rates by 0.25 percent, effective from Monday for new customers and Thursday for existing ones.

Similarly, its Bonus Saver and Business Online Saver accounts will also see a 0.25 percent rate increase from Monday. Westpac's managing director, Sarah Hearn, noted that New Zealanders have demonstrated resilience amidst cost pressures and uncertainty, and they are well-positioned to handle further rate hikes. Most home loan customers currently hold fixed rates, and no changes will be made for them today.

However, Westpac acknowledges that some borrowers may be concerned about rising rates and encourages them to seek assistance. Mortgage adviser Campbell Hastie stated that borrowers were not surprised by the OCR increase but expected it to eventually impact fixed rates. The economist from Cotality, however, believes the increase will not significantly impact the housing market.

While there is a possibility of higher mortgage rates in the coming months, the housing effects of higher interest rates might be somewhat offset by the resilient employment situation. Nonetheless, the upcoming election could play a crucial role, particularly for property investors awaiting signals from the opposition regarding interest deductibility.