Heritage Bank has increased variable interest rates on selected products by 10 basis points as a result of “ongoing cost pressures”.
The customer-owned bank’s standard variable rate for owner-occupiers is now 5.14 per cent and the discount variable rate is now 3.99 per cent.
The bank has also raised the three-year term deposit rate by 20 basis points to 3 per cent, while the four- and five-year rates have also risen to 3.00 per cent (up 15 basis points).
CEO Peter Lock said that the increases aim to balance the desire to provide borrowers with “the best rates possible” with the need to “protect the long-term sustainability of the business”.
“Unlike the big banks, maximising profit is not our top priority. However, we do need to keep investing back into the business with a range of technology improvements and branch upgrades to provide our customers with great service,” he said.
“We’re in an environment where we are facing higher costs to provide our services and the investment needed to improve them.
“To afford that investment and to remain sustainable, we have to recoup the extra costs that we’re currently incurring to run the business.
“As always, the long-term best interests of our customers are top of mind in any decisions that we make.”
Mr Lock said it was also important to consider the interests of all Heritage customers, which included savers as well as borrowers.
“People like retirees rely on the income they receive from their savings and investments to pay for their everyday living expenses. We have to be mindful of their situation, and the impacts of pricing decisions. That’s why we’ve also decided to increase the interest rates payable on a number of our term deposits,” he said.