Interest rate rises end tailwind

Between May and June the average standard one-year mortgage rate (published by the RBNZ) lifted 17bps, two-year +5bps, three-year +5bps and four-year up 1bp. The five-year rate was stable at 6.78 per cent.

The main driver of higher mortgage rates has been the gradual rise in wholesale interest rates over May and June, with the bellwether two-year swap rate up around 0.50 percentage points since early May.

The shape of the mortgage curve, on average across the big-four banks, is now a lot smoother, with floating marking the high point, six month and one-year rates broadly on a par with one another, and the five-year the low point.

Despite higher interest rates, recent LVR and Credit Contracts and Consumer Finance Act (CCCFA) tweaks have contributed to an upturn in the housing market, although it had some one-off factors nudging it along.