Good Returns - More interest rate rises coming

Weekly home loan report

More interest rate rises coming

The past week has been a relatively quiet one on the home loan front. The main changes being increases from two banks; Westpac and Kiwibank.

Westpac has put up its three, four and five year rates 5 basis points and they all now sit on 7.80%. Also it increased its two and three year capped rates by the same amount, to 8.10% and 8.15% respectively.

Kiwibank has put up its two and five year rates 10 basis points each, and its three-year rate 5 points. All three are now on 7.60% the same as its four-year rate.

One of the biggest economic factors during the week, which will impact on home loan rates, was the strong employment numbers.

ASB Bank economist Kate Skinner says the markets have increased the probability of the Reserve Bank hiking rates. This means that a rise in floating rates is inevitable, and shorter term fixed rates (up to two years) are also likely to rise.

"The risks of additional monetary tightening being needed have increased in the past week. Current market pricing implies a 35% chance of a 25 basis point rate hike by the Reserve Bank on March 10."

Other lenders to increase their fixed rates during the week were: Loan Plan, NZ Home Loans, NZ Mortgage Funds and Resi.

Three year rates, which are being picked as the place to fix at the moment, range from Bank Direct's 7.50% to GEM Home Loans which is sitting at 8.35%. Most of the banks are sitting at the 7.70% mark, however ASB Bank is the highest at 7.80%.

To compare home loan rates go to:

http://www.goodreturns.co.nz/section/200.html

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