Key Facts:

– Banks in New Zealand have been raising their interest rates in response to increasing wholesale borrowing costs.
– Wholesale borrowing rates have been rising due to global factors, such as inflation concerns and central bank policy changes.
– The Reserve Bank of New Zealand has also signaled the possibility of raising the official cash rate in the future, adding to the pressure on banks to increase their rates.
– Banks argue that the increases are necessary to maintain profitability and ensure they can continue lending to customers.
– Customers with fixed-rate mortgages are not affected by the rate increases until their fixed term expires, while those with floating or variable rate mortgages are likely to see their interest costs rise.

Article Summary:

Banks in New Zealand have been increasing their interest rates recently, causing concern for home owners and potential buyers. The rate hikes are mainly due to rising wholesale borrowing costs, which are influenced by global factors such as inflation concerns and central bank policy changes. The Reserve Bank of New Zealand has also hinted at the possibility of raising the official cash rate in the future, further pressuring banks to raise their rates.

Banks argue that the rate increases are necessary to maintain profitability and to ensure they can continue lending to customers. However, this means higher borrowing costs for customers with floating or variable rate mortgages. Customers with fixed-rate mortgages are not immediately affected by the rate increases until their fixed term expires.

It is advised for home owners and potential buyers to stay informed about the interest rate situation and consider their options. This includes comparing rates and potentially seeking advice from mortgage brokers to find the best deals. It’s also important to review their mortgage agreements and understand the potential impact of rate changes.

To read the full article, go to: https://www.stuff.co.nz/business/money/300965357/rising-interest-rates-heres-how-banks-justify-the-increases