ASB Bank has raised its fixed mortgage rates on Friday.
The move comes at a time when interest rates in the wholesale money market are rising.
There is speculation that the Reserve Bank of New Zealand will raise its official cash rate sooner than the latter part of 2010 it has been signalling.
Reserve Bank of Australia (RBA) governor Glenn Stevens said this week it would be a mistake to be "too timid" to raise interest rates in response to a brighter economy.
The RBA board took the first step to returning interest rates towards what Mr Stevens described as more normal levels last week, when it lifted the cash rate to 3.25 per cent, from 3 per cent.
In New Zealand, government-owned Kiwibank announced last week that it was raising many of its fixed mortgage rates.
ASB has raised its six-month mortgage rate by 25 basis points to 5.75 per cent. Its new five-year rate is now 8.75 per cent.
The one-year rate is 6 per cent, the 18 month rate is 6.6 per cent and two-year rate is 7.15 per cent. The three-year rate is 7.95 per cent and the four-year rate is 8.5 per cent.
ANZ economists said on Friday that a sell off in New Zealand's interest rate market on Thursday, on higher than expected consumer price index data, had continued overnight.
The sell-off raised interest rates in the money market across the yield curve.
"Bias is firmly to the pay side," ANZ said.
© 2009 AAP
