Fixed mortgage rates could be heading up “pretty soon”, says a New Zealand bank boss as wholesale interest rates rise on the back of volatility in the Middle East.

Speaking on Early Edition with Ryan Bridge, Co-operative Bank chief executive Mark Wilkshire said wholesale rates were up about 30 basis points (bps) in the past couple of weeks.

“I think banks will have to start passing that on.

“Even though the Official Cash Rate [OCR] was priced in, those wholesale markets have lifted. I expect this to be upward pressure on retail mortgage rates.”

Wilkshire said fixed home loan rates could rise “in that region of 30 basis points”.

“It’s going to have to happen pretty soon.

“Wholesale markets have been very volatile on the back of these conflicts.”

On the Co-operative Bank lifting its own fixed rates, Wilkshire said, “I think we’re going to have to go pretty soon”.

“They’re not big changes but I think we’re going to have to see that pass through.”

Lower wholesale interest rates had led to banks cutting some of their longer-term fixed rates last month, while shorter-term rates continued to rise on expectations of an OCR hike in July.

That hike came, with the Reserve Bank (RBNZ) lifting the OCR earlier this month from 2.25% to 2.5%.

Floating rates, which move in lock-step with the OCR, were quick to rise.

However, fixed mortgage rates are heavily influenced by wholesale interest rates.

Following the OCR hike, economists told the Herald the move was unlikely to trigger immediate fixed mortgage rate rises.

ANZ chief economist Sharon Zollner said OCR changes take about 18 months to take effect.

Instead, the OCR hike would “put a bit of a floor under short-end rates”.