Westpac has hiked its six month and two year mortgage rates by 10 and 21 basis points (bps), respectively, but left its variable rates on hold.

Westpac's new six month mortgage rate is 5.59%, and its new two year rate is 7.2%. The new six month rate is still the lowest offered by the major banks in New Zealand, while Westpac's new two year rate has moved into the pack of rates offered by other banks. Westpac's standard variable rate is unchanged at 6.29% and its 'Choices Everyday' revolving credit variable rate is at 5.69%.

See and compare all mortgage rates here.

While fixed mortgage rates have been rising in recent weeks, variable rates have remained stationary at the low end of the mortgage rate curve as the Reserve Bank keeps the Official Cash Rate (OCR) at its record low of 2.5%. The OCR has a much stronger influence on variable mortgage rates than on fixed rates, and variable rates are expected to start rising when the Reserve Bank decides to hike the OCR 'around the middle' of 2010.

For more on the OCR see here.

Having variable rates at the low end of the mortgage rate curve has meant many borrowers decided against fixing their mortgage rates for longer terms, instead moving onto variable and very short term fixed rates. This has given the Reserve Bank's monetary policy more potency in recent months as it means hikes in the OCR will flow through quickly to more borrowers who may have missed chances to lock in low longer term fixed rates.

One basis point is 0.01%.