Kiwibank the latest to raise longer-term home loan rates
New Zealandās Reserve Bank governor Anna Breman has stepped in to calm financial markets after wholesale interest rates climbed higher than expected. The move follows recent increases in long-term lending rates by banks, triggered by the Reserve Bankās Official Cash Rate (OCR) decision in November. Despite her intervention, wholesale rates remain well above levels seen before the November announcement.
Banks have been lifting longer-term lending rates in response to rising wholesale market costs. This trend began after the Reserve Bankās OCR decision last November. Kiwibank, for example, has adjusted its fixed home loan ratesāraising special two-to-five-year rates by 20 to 30 basis points for borrowers with at least 20% equity. Those without the minimum equity also face increases of 20 to 30 basis points on standard rates.
However, the bank did lower its six-month home loan rate by 16 basis points, bringing it down to 4.59%. The mixed adjustments reflect ongoing volatility in funding costs. Financial markets have already priced in potential rate hikes for the second half of 2026. This contradicts the Reserve Bankās own projections, which suggest no increase until 2027. Governor Bremanās recent statement aimed to ease market speculation, but wholesale rates, though slightly reduced, still sit far above pre-November levels.
The Reserve Bankās efforts to stabilise expectations have had limited impact so far. Borrowers now face a mix of higher and slightly lower rates, depending on the loan term. With markets anticipating earlier hikes than the central bankās forecast, uncertainty around future lending costs remains.
