4 Aug 2011

Banks predicted to follow ASB rates move

8:55 am on 4 August 2011

Banking analysts say it's likely the major banks will quickly follow ASB's move to raise fixed mortgage rates across the board.

On Wednesday, ASB increased its rates for all terms longer than six months.

A senior lecturer in banking at Massey University, Claire Matthews, says it is costing banks more to buy in money for lending because of a strong expectation that the Official Cash Rate will soon rise.

Mortgage brokers say that has also led to an increasing number of people switching from floating to fixed rates, which may also be behind the interest rises.

But the ASB says while the bank has seen a slight increase in demand for fixed rates, that has not influenced its decision. It says the rises are purely because borrowing costs for banks have gone up.