The red bank raises rates for both borrowers and savers, following ASB, passing on the RBNZ policy rate increase

Westpac is the next to change consumer interest rates following the May RBNZ OCR rise.

ASB made some changes yesterday. They moved rates up almost immediately the OCR decision was announced, adding +25 bps and taking their floating rate to 8.64%. (And even before the OCR was announced, ANZ added +25 bps to their business overdraft and business indicator base rates.)

Now Westpac has announced a +25 bps rise to its floating rate, also taking it to 8.64%.

It raised its one year fixed rate by +20 bps to 6.99% and cut its two year fixed rate by -14 bps to 6.45%. It made other changes too, including for its fixed 6 month and 18 month home loan rates, raising both.

On the savings front Westpac has raised its key savings rates by +25 bps. Their Bonus Saver is now at 4.50%. Their Simple Saver is up +20 bps to 2.70%. And their 32 day Notice Saver is up +25 bps to 4.75%.

They also raised their six and nine month TD rates by +20 bps but left their 8 month special at 5.70%, which is still higher than any of the TD rates they raised today.

Although local financial markets were surprised the RBNZ called 'time' on its current rate hiking cycle at the MPS, financial market reactions have been relatively muted. The NZD fell sharply and stayed down. But swap rates fell in Wednesday after the RBNZ had their say, but not by as much as you might have assumed and only back to levels we had both a week and a month ago. And today, it is likely that wholesale swap rates are moving back up to claw back some of the fall. The driver is the background international rates, juiced along by the uncertainty of the sill America debt ceiling negotiations. Until they are concluded satisfactorily, the risks are all to the high side