Westpac has raised rates on every mortgage term except six months and two years, effective Friday. The standout move is the 18-month rate breaking above 5 percent for the first time in this cycle, while the two-year rate stays competitive against BNZ.
Westpac has announced changes to its fixed mortgage rates that take effect from Friday, with increases across most terms while keeping two rates unchanged. The most notable move is the 18-month rate crossing above 5 percent — the first time any term has broken that threshold in the current cycle.
The one-year rate rises to 4.79 percent, making it the highest one-year rate among all banks. The 18-month rate goes over 5 percent — the first time any major bank has offered above 5 percent for that term in this cycle. The two-year rate stays unchanged, meaning Westpac will be competitive at that term — equal lowest among the main banks alongside BNZ.
For longer terms, the three-year rate rises to match ANZ and ASB but sits below Kiwibank's equivalent. The four and five-year rates become the lowest among the main banks, matching BNZ at those durations.
Westpac is also raising term deposit rates. The one-year TD rate increases by 5 basis points, matching SBS Bank and BNZ. Longer terms rise by 10 to 20 basis points, though the article notes there is limited demand at the longer end of the maturity profile.
Where the market is heading
The interest.co.nz analysis notes that the direction for fixed rates depends on a combination of local and international influences. The RBNZ's next OCR review is May 27, and while markets do not expect a hike at that review, they do expect rates to rise from current levels at the following review — pricing for an OCR that reaches 3.50 percent within a year. The OCR is currently at 2.25 percent, meaning the market is pricing in a significant tightening path.
Robust mortgage loan demand is another local factor. RBNZ data shows mortgage borrowing has been far more resilient than business or rural borrowing, even as the real estate market shows seasonal weakness in transaction volumes and price softness.
International influences are also pointed to as a driver that could push fixed rates higher sooner than the RBNZ's influences alone would suggest.
The practical message from the analysis is that borrowers who wait could face higher repayments — a framing that reflects the market pricing path rather than advice.
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.