Kiwibank would be partially sold off under ACT.
Kiwibank has lifted its home loan, and term deposit interest rates.
The move follows rate increases by ANZ and Bank of New Zealand last week, and reflects banks’ rising funding costs as money markets price in expectations of future official cash rate rises by the Reserve Bank Te Pūtea Matua.
Kiwibank’s one-year fixed rate home loan for borrowers with equity of 20% or more has increased from 4.85% to 5.19%, and its two-year fixed rate from 5.19% to 5.69%.
Borrowers with less than 20% equity in their homes pay a higher rate on their mortgages.
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The one-year fixed home loan rate from Kiwibank for low-equity borrowers is 6.45%, up from 6.1%.
The bank’s one-year term deposit rate for customers with $10,000 to invest has gone from 3.3% to 3.75%.
Household’s rising home loan costs is predicted to take a huge bite out of households’ disposable income.
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ASB senior economist Mike Jones said: “We estimate that higher mortgage interest rates will add a (net) $5.6 billion to aggregate household outgoings over the coming 18 months.”
He expected wage rises to offset some of that cost rise for households.
“Adding in other cost of living hikes lifts this estimate to more like $15b. Strong growth in household wealth will help buffer this impact, but most of it is tied up in housing. And you can’t pay the bills with your house.”
Jones said that would lead to “anaemic” growth in consumer spending during the rest of the year.
“Belts will be tightened,” he said.
Some of the savings that had been built up in bank deposits would also be run down to cope with rising costs for households, he said.
“It’s well known that households have built up a swathe of savings through the pandemic,” he said.
“But our ball-park estimates suggest that the mortgage rate and cost of living hit of around $15b is of a size roughly equivalent to two thirds of all post-Covid savings.”
Much of those savings would, however, not be owned by households with large home loans.