Kiwibank raises interest rates as funding costs climb

Kiwibank, one of New Zealand's major retail banks, has increased its interest rates, following a similar move by rival lenders over the past week. The bank confirmed the rate rise applies across a range of its lending and deposit products, including mortgage and savings offerings used by everyday customers.

The bank said the increase reflects the rising cost of funding it sources through wholesale markets, where banks borrow from other financial institutions and investors to support their lending books. Other major New Zealand banks made comparable adjustments last week, each citing similar wholesale funding pressures as the main driver behind their own rate changes.

The rate rises come as New Zealand's banking sector navigates a shifting interest-rate environment, with lenders adjusting pricing in response to funding-market conditions rather than official cash-rate changes alone. Customers with mortgages or savings products at Kiwibank are expected to see the new rates reflected on their accounts shortly, and analysts say further adjustments across the sector cannot be ruled out if funding costs keep climbing.