Wholesale Borrowing Costs Skyrocket, Mortgage Rates Set for Further Hikes

Mortgage rates in New Zealand are expected to continue rising as the cost of wholesale borrowing for banks has increased significantly. The two-year wholesale borrowing rate jumped from 3.35% to around 3.70% in just four weeks, reflecting market expectations of higher inflation and global borrowing costs.

Independent Property Commentator Tony Alexander attributed this increase to domestic factors, including the impact of rising interest rates in Australia and the United States on New Zealand's economy.

New Zealand is currently experiencing a mild economic recovery, with unusually high inflation levels for this point in the cycle. As a result, monetary policy will likely be tightened further, contributing to higher mortgage rates.