Media Statement from Bank of New Zealand
8 December 2003
Small Increase In Variable Mortgage Rate
The Bank of New Zealand today announced a small increase in its variable rate for residential mortgages. The increase will affect about one third of Bank of New Zealand mortgage customers. The remainder of the bank's residential customers - about 70% of customers - have fixed-rate mortgages and they will be unaffected by the increase.
The variable rate for mortgages with Bank of New Zealand will increase from 7.10% to 7.25% (increase of 0.15%). One other major lender, Westpac, raised its variable rate to 7.25% in November.
The increase in variable rates will add $2.93 to fortnightly repayments of an average-sized variable rate mortgage ($66,000 over 25 years) with Bank of New Zealand.
The change is effective from Tuesday, 9 December, for new customers, and from Tuesday, 23 December, for existing customers. Existing customers will be advised in writing of the change and the impact it will have on their repayments.
At the same time as it adjusts variable mortgage rates, Bank of New Zealand is increasing the rates it pays deposit holders with term deposits. Term deposit rates will increase by between 0.05% and 0.3%, effective immediately, for new term deposits of 90 days or more.
Bank of New Zealand spokesperson Owen Gill said: "People with term deposits with Bank of New Zealand will get the benefit of higher interest rates immediately."
Mr Gill said the increase in variable mortgage rates reflected increasing 90-day bill rates.
"Residential mortgages in New Zealand are funded from the 90-day money market, and interest rates in those markets have been increasing slowly but steadily since midway through the year. Ninety day bill rates have risen 21 basis points since late July.
"Ninety day rates are rising because those markets recognise that interest rates in New Zealand generally are rising as inflationary pressures in the domestic economy grow. In other words, the cost of borrowing is increasing across the New Zealand economy and increases in variable mortgage rates reflect that."
Bank of New Zealand's fixed rates for mortgages, which are 6.90% for one year, and ranging up to 7.75% for five years, remain unchanged. Bank of New Zealand continues its special offer of mortgages with a 3.99 % fixed rate for the first three months on a three-year 7.6% fixed rate home loan.