Westpac became the first major bank to lift its floating home loan rate by the full 25 basis points following the RBNZ's July OCR increase, with other banks following.
When the Reserve Bank lifted the Official Cash Rate by 25 basis points on July 8, banks were initially quiet. Westpac has now broken that silence, passing the full increase through to its floating mortgage rate — and the others have quickly followed.
Westpac raised its Choices Floating rate to 6.14 percent and its Choices Everyday rate to 6.24 percent. In a notable contrast to the 2025 rate-cutting cycle when most banks did not pass on the full OCR deductions to borrowers, this time the full increase has flowed through. Per interest.co.nz, the bank also raised some of its savings rates, though not always by the full 25 basis points — its Simple Saver rate went up by 15 basis points to 0.20 percent, while its Bonus Saver potential rate rose by 25 basis points to 1.50 percent.
ASB, BNZ and Kiwibank have all followed with their own 25 basis point increases to floating rates. Each bank has set a different effective date for existing borrowers: ASB's new rate of 6.04 percent takes effect from July 15, BNZ moves to 6.09 percent from July 29, and Kiwibank reaches 6.00 percent from July 27. For new clients, most banks are applying the changes sooner. Cooperative Bank, Heartland Bank, SBS Bank and TSB had not announced changes at time of publication.
The RBNZ's July 8 OCR increase — lifting the rate from 2.25 percent to 2.50 percent — signalled continued pressure on monetary policy as the bank works to manage inflation. The RBNZ noted at the time that the decision reflected both external factors — including global price pressures — and domestic monetary conditions.
What floating rate borrowers should watch
The RBNZ has indicated it will continue monitoring inflation data before its next decision. For borrowers on floating or variable rates, each OCR movement directly affects what they pay. Those on fixed rates are insulated until their current term expires, at which point they will renegotiate at prevailing rates.
The pattern of banks passing on the full OCR increase to floating rates contrasts with their behaviour during the cutting cycle, when many absorbed part of the reduction into their margins rather than passing it fully to borrowers. This asymmetry has drawn comment from analysts who track bank pricing behaviour.
Westpac's Choices Floating rate now sits at 6.14 percent, making it among the higher floating rates currently on offer from the major banks. borrowers tracking the market will be watching to see whether Cooperative Bank, Heartland, SBS and TSB announce their own adjustments in the coming days.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.