by Paul McBeth
Bank of New Zealand has taken the plunge, putting up its floating mortgage rate in what could turn out to be a round of rate increases.
The BNZ has now broken ranks from other bank lenders by raising its floating rate from 6.50 per cent to 6.75 per cent, effective from tomorrow for new customers.
Floating rates have been extremely stable since late last year and have, to date, maintained a constant path in line with the unchanging Official Cash Rate. The Good Returns mortgage rates table has only recorded a handful of floating rate changes in recent months and these have been positioning moves by non-bank lenders.
The story for fixed rate mortgages, however, has been markedly different as these rates are influenced by the long-term US bond market. Three-year rates, for example, ranged from 7.45 to 7.90 per cent only two months ago but are now tipping 8.30 per cent.
BNZ attributes its rates move to increased borrowing costs, saying that 90-day bank bills have risen 0.5 percentage points over seven months. That's a signal that changes to floating mortgage rates won't just happen when the OCR is altered, as the 90-day rate has now shown that it can vary quite significantly even with a constant OCR.