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ANZ has hiked its home loan and deposit rates - the first major bank to move since the Reserve Bank increased the official cash rate last week by 75 basis points to 4.25 per cent.

The bank isn’t passing on the full OCR increase to borrowers but has upped its floating and flexible mortgage rates by 65 basis points while its shorter term fixed rates will rise by 55 basis points and its four and five year fixed term rates will increase by 35 basis points.

The changes mean all of its fixed term rates are now over 7 per cent for those who do not have a 20 per cent deposit or equity. The popular one year rate will rise to 7.14 per cent and the two year rate to 7.34 per cent from tomorrow.

Its “special rates” which require 20 per cent equity are all rising 55 basis points with the one year fixed term rising to 6.54 per cent and the two year rate to 6.74 per cent.

Ben Kelleher, ANZ managing director said when reviewing interest rates the bank considered a range of factors, including the impact on customers, the Official Cash Rate and changes in wholesale interest rates.

“We understand the cost of living and rising interest rates are having an impact and we’re contacting our home loan customers to ensure they are aware of the options they have to manage repayments in a rising interest rate environment.

“We’re taking a balanced approach in how we support customers by also increasing rates on our term deposit and savings products, which will help support customers with long-term savings goals,” Kelleher said.

The bank will increase its serious saver rate by 75 basis points while its term deposit rates will also rise with the one year term deposit increasing 60 basis points to 5.10 per cent.

ANZ’s business floating and business overdraft base rates would also go up 65 basis points.

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Last week’s OCR rise was the fastest on record and the cash rate is now the highest it has been since December 2008. The RBNZ is forecasting the rate to continue rising to a peak of 5.5 per cent in September 2023 with a recession predicted in the second half of next year.

Kelleher said the bank was proactively reaching out to customers who showed signs of needing reassurance or support and encouraged anyone who had concerns to get in touch.

“People shouldn’t be nervous about talking to their bank, we’re here to support customers with the various options available to them.

 “There are steps you can take to manage your home loan and things you can do to help relieve some financial pressure,” he said.

Last month ANZ NZ chief executive Antonia Watson said 57 per cent of its home loan customers were still on an interest rate that began with a two or a three and those fixed terms were due to roll over in the next year or so.

“There is still some pain to come. Inflation is stubbornly high. Our economists are expecting a couple of large OCR rises in the next few months so times are looking tougher and the provisioning line is a reflection of that.”

However, Watson said customers were still well positioned with high employment and analysis of its borrowers showed their pay had increased by an average of 6 per cent in the last year.

“That provides a good buffer against interest rate rises. People have been saving more and a lot of customers are ahead on their repayments.

“Absolutely, people are starting in good shape. However, interest rates are rising quickly and by quite a bit.”