TSB has lifted its 1 year and 2 mortgage rates, moving ahead of the Reserve Bank's decision expected next week to lift the Official Cash Rate.
The Taranaki-based cooperative increased its 1 year mortgage rate to 6.15% from 5.99%, bringing it back nearer to the 6.35% that the other banks are grouped around. TSB raised its 2 year mortgage rate to 7.19% from 7.09, which is also nearer to the 7.3% the other banks are grouped around. See all bank mortgage rates here.
TSB's floating mortgage rate is unchanged at 5.9%, which is above Kiwibank on 5.65%, BNZ on 5.59%, ANZ on 5.69%, National on 5.75% and Westpac on 5.65%.
The Reserve Bank is widely expected to hike the OCR from 2.5% in the next two months, pushing up term deposit and mortgage rates. However, the OCR is not expected to be raised as far or as fast as in previous recoveries because banks are less able to lend quickly and are being forced by shareholders and regulators to fund their lending locally, rather than from 'hot' money markets. The bank's first opportunity for a hike will be June 10 and its next chance is July 29. Most economists see the first hike on one of those two days.
This means floating mortgage rates are likely to remain less than fixed rates for some time, given fixed rates are funded more from these 'hot' international markets. Term deposit rates will continue to rise and be significantly higher than the Official Cash Rate as banks compete hard for funds.
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