Westpac has raised most of its fixed mortgage rates, bringing them back into line with offers from most other banks. See and compare all mortgage rates here. Westpac raised its 18 month fixed mortgage rate by 10 basis points (bps) to 6.09%; its three year rate by 9 bps to 7.49%; its four year rate by 25 bps to 8.2%; and five year by 24 bps to 8.49%. While variable mortgage rates have been falling recently, fixed rates are on the way up as local funding costs rise. The Reserve Bank has been pushing the banks to fund themselves more from local deposits with longer terms of funding in a drive to diminish the banks' reliance on short term 'hot money' from global wholesale markets. This move is part of trend in recent weeks for mortgage rate 'curve steepening', where longer term interest rates are increasingly higher than shorter term and variable rates. This is a reversal of the status quo for the last five years when borrowers could usually get a cheaper rate by borrowing for longer terms. Cuts in variable rates by ASB, BNZ, Westpac and Kiwibank (but not ANZ National) in recent weeks have increased the competitive pressure to drive borrowers down to floating, six month or one year rates, which are around 5.5-5.7%. They are now significantly below the two and three year rates on 6.5-7.7%.
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