Westpac has raised its six and eighteen month mortgage rates by 10 and 20 basis points, respectively, but left other rates on hold. Westpac's new six month rate is 5.69%, which is equal to its Everyday floating rate, and its new eighteen month rate is 6.79%. See and compare all mortgage rates here. While fixed mortgage rates have been rising in recent months, partly in anticipation of OCR hikes later this year, variable rates have remained stationary as the Reserve Bank holds the Official Cash Rate (OCR) at its record low of 2.5%. Inflation figures out earlier this week supported the Reserve Bank's view that it could keep the OCR on hold until around the middle of 2010, pushing back market expectations for an OCR hike to the April-July window, from March. One effect of the market having low variable rates and higher fixed rates is many borrowers are shifting to the 'short-end' of the rate curve, opting for variable or short-term fixed rates. This has given the Reserve Bank's monetary policy much more potency than it had over much of the last decade, as a change in the OCR quickly flows through to shorter-term rates. See here for a piece on how the RBNZ's monetary potency has increased as the proportion of home loan borrowers on floating mortgage rates hit its highest level in almost five years.
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