Finance minister Nicola Willis is urging mortgage holders to shop around after Westpac increased its fixed-term home loan rates, lifting pricing across its 2- to 5-year terms by 30 basis points.
The move takes Westpac’s 2-year special rate to 4.75%, marking a shift after several months of falling interest rates that the Government has highlighted as evidence its economic plan is working.
Willis said borrowers should use competition to their advantage when refixing or taking out a loan.
RNZ reports that she said: “My message to New Zealanders is shop around. Westpac have made that choice. Other banks have not. I really want to see New Zealanders seeing that they have some power when it comes to where they take their mortgage.
“Don’t just look at the headline rates, go and hold your bank’s feet to the fire. See if another bank will give you a better rate. Make them compete with each other. Don’t just accept that you’re getting the best deal right now.”
Prime minister Christopher Luxon said the broader economic context remained important. He said the Government’s focus on managing spending had helped bring inflation down and supported lower mortgage rates.
He said: “We’ve been managing spending so we can manage inflation down so we can get interest rates down.
“For a New Zealander that’s on an average mortgage that’s $10,000 a year of savings that they’ve got through nine interest cuts already under our government.”
Luxon said each bank would make its own pricing decisions, but noted that interest rates were “relatively low compared to where they sit in other parts of the world now” and that signs of economic growth were emerging.
Labour leader Chris Hipkins told RNZ that Westpac’s rate increase showed the coalition’s economic strategy was failing to deliver.
He said: “They’ve built their whole narrative around lower interest rates and fixing the economy. They haven’t fixed the economy; unemployment’s gone up, business liquidation’s are up, people in hardship are up, house building has slowed down, the list could go on.”
Hipkins said the Government was relying on the Reserve Bank rather than addressing cost-of-living pressures directly.
He said: “They’re waiting for the Reserve Bank to save them because they haven’t got a plan to tackle the cost of living or to grow the economy. Nicola Willis has made this problem for herself. She actually said the Reserve Bank’s one job is to keep inflation within the target plan… That’s the government’s job and they haven’t got a plan to do that.”