Finance Minister Nicola Willis says her message to New Zealanders with mortgages is to "shop around". Photo: RNZ / Samuel Rillstone
The finance minister says mortgage holders should shop around after Westpac increased its fixed-term home loan rates.
Westpac is increasing its home loans over two-to five-year terms by 30 basis points, taking a two-year fix to 4.75 percent.
It comes after a period of falling interest rates that the government has made a point of publicising to say its economic plan is working.
Asked about Westpac's move to increase its rate, Finance Minister Nicola Willis said people should investigate what bank can offer them the best deal.
"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. Let's make them compete."
Prime Minister Christopher Luxon said the wider context was important.
"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.
"Each bank will make its own decision about its assessment of the medium term but the Reserve Bank will continue to monitor that. What's important is that after a world of twelve interest rate rises, we've had nine interest rate cuts.
"Interest rates are relatively low compared to where they sit in other parts of the world now. Inflation is under control and you're seeing signs of growth in the economy."
Labour leader Chris Hipkins said Westpac's higher rate proved the coalition's economic plan was not working.
"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.
"I think this highlights the problem with the government's overall economic strategy here. 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. They don't have a remit around employment anymore. They don't have a remit to grow the economy. That's the government's job and they haven't got a plan to do that."
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