Another major bank is raising the longer fixed interest rate for home loans. Now might be a good time to reassess the term of your fixed-rate mortgage obligation, but the decisions aren’t easy


In line with Kiwibank, Westpac has raised three longer-term fixed interest rates.

But it didn’t match Kiwibank’s one-year rate cut.

This move is accelerating the steeper yield curve of the home loan market.

The other major banks will most likely take the same step in the long run with their own rate hikes coming soon.

This rise may not really be a signal for short-term rate hikes. But they will also come.

So now it’s time to think about locking in the longer rates before they disappear. That’s especially true if you think the shorter one- and two-year flat rates will increase at some point in the planable future.

There are still a handful of banks that offer four- and five-year rates below 3%, and most of the others are in the 3% to 4% range.

But what are the chances that one- and two-year interest rates will rise above that in the next year or so?

It is certainly a possibility. But there are doubts about its likelihood.

There is a simple money policy from the RBNZ and banks can use the Funding for Lending program at the OCR rate. There is no suggestion that this offering is on the brink of disappearing and the three-year commitment to this program remains.

Will OCR increase? Possibly in the next year or so, and maybe at +1.0%. If and when that happens, it will change wholesale expectations and drive up market rates. Much will depend on how well the RBNZ gives off signals that change. Surprises will cause them to rise faster than well-marked moves.

The main point is that no one, not even RBNZ policy makers, knows what will happen in the next two years. They make their decisions at that moment, based on the facts in front of them.

Anyone who now “knows” is an unreliable source.

But that doesn’t make it any easier for you if you’re considering solving for a long time.

You have to make a choice and feel comfortable with it. There is no point in looking back and doubting afterwards. Make sure you can live with the decision you make from a payments and household budget standpoint.

A useful way to understand these new changed mortgage interest rates is by using our full-fledged mortgage calculators. (Term deposit rates can be assessed using this calculator).

And if you already have a fixed-term mortgage that cannot be renewed at the moment, our dan break allowance calculator can help you assess your options.

Here’s the updated snapshot of the lowest advertised fixed-term mortgage rates currently offered by the major retail banks.

Select chart tabs »

The graph ‘6 months %’ is drawn here.


Here the graph ‘1 year %’ is drawn.


Here the graph ‘2 year %’ is drawn.


Here the graph ‘3 year %’ is drawn.


Here the graph ‘4 year %’ is drawn.


Here the graph ‘5 year %’ is drawn.


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