#business Banks Tighten Home Loan Settings as Mortgage Costs Edge Higher

New Zealand homeowners are facing renewed pressure as major banks quietly adjust their mortgage settings, with ASB scaling back some discounted rates while Westpac lifts its longer-term fixed home loan rates.

According to reporting by the New Zealand Herald, ASB has stopped offering certain mortgage rate discounts that had previously been available to borrowers, a move that has largely gone unnoticed by the wider public. At the same time, Westpac has increased rates on some longer-term fixed mortgages, signalling a more cautious stance across the banking sector.

The changes come despite growing expectations that interest rates may ease in 2026, highlighting ongoing uncertainty in global financial markets and the cost of funding for banks. While the Reserve Bank’s official cash rate remains unchanged, banks continue to adjust their lending settings in response to wholesale funding costs, inflation risks, and economic outlooks.

For households already under strain from high living costs, the shifts could limit options for refinancing or locking in lower rates. Mortgage brokers have warned that borrowers may now find fewer negotiated discounts available, particularly those with smaller deposits or less bargaining power.

From a Māori and community perspective, the tightening of mortgage conditions raises concerns about housing affordability and equity. Māori home ownership rates already lag behind the national average, and higher borrowing costs risk widening that gap further—particularly for first-home buyers and whānau seeking to transition from renting into stable housing.

Housing advocates say the developments underline the need for stronger policy responses to support affordable home ownership, including targeted lending products, shared-equity schemes, and sustained investment in Māori housing solutions.

With banks signalling caution and households watching every basis point, attention will now turn to whether other lenders follow suit-or whether competitive pressures eventually bring relief to borrowers navigating one of the toughest mortgage environments in decades.

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