(File image) Photo: 123RF
Bank account savers enjoying higher interest rates could be short-lived as the prospect of OCR cuts looms on the horizon.
Commercial banks have hiked their fixed home lending and term deposit rates in response to the Reserve Bank's increases to the official cash rate.
ANZ has increased its serious saver rate by 50-basis-points and increased term deposit rates, while ASB has increased interest rates on its one-to-five-month term deposits, which it says beats the rates offered by other commercial banks, and TSB has increased savings interest rates.
Kiwibank has also passed on the benefits of higher interest rates to customers, offering savers putting a minimum investment of $10,000 into a one-year term deposit an interest rate of 5.75 percent.
However, the interest rates edge lower over longer time periods.
Kiwibank senior product manager Richie McLay said the 5.75 percent rate was the highest the bank's had on offer for a one-year term deposit in 15 years, due to rising inflation leading to rises in the OCR and wholesale interest rates.
"When we set our interest rates, we mainly look into three things: one is the wholesale interest rates, which are largely linked to the OCR and what they're expected to do over the future, and there's a chance that over the next coming year they may come down," he said.
"The second is making sure that we are competitive in the market and well-positioned against our competitors, and we also want to make sure that we are achieving a good balance between our saving and lending rates and that all our customers are receiving a fair deal."
McLay said there was a chance the official cash rate, and therefore wholesale interest rates, could come down over the next few years, hence the lower interest rates over a longer time period.
The Reserve Bank is expected to cut the official cash rate once it feels inflation is under control.