ASB has turned out to be the first major bank to lift its five-year mortgage rate.

The bank has raised its longer term rate from 7.5% to 8%. It should be noted that while cuts to the official cash rate have seen short term mortgage rates drop over several months, longer term rates have not followed suit.

Market analyst Martin Allison said that ASB's move is a sign of things to come. He continued, "It's not the OCR that determines the rate Mr and Mrs New Zealander has to pay, it's the amount we have to pay offshore lenders to refund our mortgage lending."

Homeowners have been receiving advice by the Reserve Bank that they can stay on cheaper short term rates with the OCR set to stay low for some time.

But Allison says that in the next few months this message may change.

(via TopNews New Zealand. Contributed by Girish Kumar Guha)