PHOTO: However the banks say interest rates are still at historically low levels. 

ASB has announced increases to its fixed-term mortgage and term deposit rates ahead of the Reserve Bank‘s official cash rate announcement on Wednesday.

ASB’s executive general manager of retail banking Craig Sims said despite the increase, interest rates are still at historically low levels.

“The New Zealand economy is proving robust, and the economic outlook has improved. While interest rates are now increasing, they remain at historically low levels.

“We’re mindful that some first home buyers in particular have only ever experienced the current low-rate environment. When we assess a home loan application we use a ‘test rate’ that is substantially higher than current mortgage rates to give customers the confidence they can continue to make payments if rates increase.”

The one-year fixed mortgage rate has one of the highest increases from 2.19 percent to 2.55 percent an increase of 0.36 percent.