Floating rates rise after official cash rate increase

Banks have started to move their floating rates, after Wednesday's official cash rate increase.Westpac says it is increasing variable interest rates for borrowers and some savers, after Wednesday's increase to the official cash rate.The OCR was lifted by 25 basis points, to 2.75 percent.Westpac's variable home and business lending rates will increase by 0.25 percent, effective Monday for new customers and Thursday for existing customers.Its Bonus Saver and Business Online Saver, will also increase by the same amount from Monday."New Zealanders have shown resilience in the face of cost pressures and uncertainty, and our data suggests they remain well-placed to manage further rate rises," said managing director of product, sustainability and marketing, Sarah Hearn."Most of our home loan customers are on fixed rates and there are no changes for them today."However, we recognise some customers will be worried about rising rates. We're here to help borrowers and savers manage their money through an increasing OCR cycle and we encourage them to contact us if they need any help or advice."ANZ also lifted its floating rate.Managing director for personal banking Grant Knuckey said the Reserve Bank's decision came against a mixed economic backdrop and a broadly flat housing market.He said when reviewing interest rates, ANZ considered a range of factors, including the OCR and changes in wholesale interest rates, while balancing the needs of borrowers and savers.More than 90 percent of home lending was on fixed rates."Fixed home loans are influenced more by wholesale rates and expectations of where the OCR is heading next," Knuckey said.Mortgage adviser Campbell Hastie said few borrowers would be surprised by the OCR increase."We were all expecting the rate to go up... I don't think anyone wants to hear that interest rates have gone up but I think there is a general expectation that this is going to happen and it'll eventually flow through into fixed rates."I think that's what people are expecting. Whether it happens or not is a different question but I don't think it's going to be a surprise to anyone."He said interest rates were unlikely to rise enough to go back to their levels of two years ago."It's more than what it was six months ago but not like what it was two or three years ago."Cotality chief property economist said the increase was not likely to have much of an effect on the housing market."The mood amongst buyers and sellers certainly remains fairly cautious, and those with mortgages will be wary of the recent interest rate increases on popular terms such as the two-year fix," he said."That being said, although floating rates may well shift higher to some extent after today's OCR rise, it's arguably already been priced in to prevailing fixed rates, so they might not show too much movement in the coming days."Of course, looking out over the next few months, there still seems a greater likelihood of higher mortgage rates rather than flat or down."The resilience of employment ...will tend to offset the housing effects of higher interest rates to a degree. But the looming election is another key factor at the moment, especially for property investors as they wait any indications from the opposition about interest deductibility."Sign up for Money with Susan Edmunds, a weekly newsletter covering all the things that affect how we make and spend money