BNZ has raised three of its fixed-term mortgage rates by 10 basis points, marking the second rate increase in just two weeks for some terms. The bank's 18-month rate now sits at 4.95%, the two-year term at 5.19%, and the three-year term at 5.39%, with borrowers holding less than 20% equity facing additional low equity premiums. This follows an earlier April 23 rate hike that saw the 18-month term rise by six basis points and the two-year term increase by 20 basis points.

The rate increases reflect broader market pressures from rising wholesale interest rates, which directly impact banks' borrowing costs. All major banks have lifted rates in recent weeks amid concerns that the Middle East oil crisis could drive inflation higher, potentially forcing the Reserve Bank and other central banks to raise interest rates further. The Reserve Bank maintained the Official Cash Rate at 2.25% last month, with the next OCR decision scheduled for May 27, just one day before the Budget announcement.

The rate adjustments come as BNZ reported a significantly reduced half-year profit of $494 million for the six months ending March 31, representing a substantial 37.9% decline of $301 million compared to the previous year. This financial backdrop underscores the challenging operating environment banks face as they navigate between maintaining profitability and managing the costs associated with volatile wholesale funding markets.