The Co-operative and Kiwibank became the latest lenders to raise rates in the past few days.
Kiwibank made its second increases in a fortnight, while The Co-operative raised rates across the board on six month to five year mortgages.
The challenger banks followed the big four, all of which have lifted their fixed rate pricing in recent weeks. Some have lifted rates by more than 30 basis points.
Borrowers have felt the pinch this month as banks react to increases in the wholesale markets over the course of 2021. Investors in those markets have priced in official cash rate increases for the next three Reserve Bank meetings.
Bank pricing, influenced by wholesale rates, has reacted to recent moves.
ASB economist Mark Smith told TMM Online that the increases of the past few weeks had priced in wholesale market movements, and in turn, priced in Reserve Bank rate hikes for the next few meetings.
"Mortgage rates are going up now already because markets expect the OCR to go up shortly."
Though banks have priced in the Reserve Bank's next moves, there are likely to be further increases over the next month as the central bank pulls the trigger on rate increases.
"We would expect those variable rates to move up. Our forecasts still assume that rates will move up further, but not the same extent, because [wholesale] markets are already factoring that in."
ASB's analysis predicts the OCR will move to 1.6% to 1.7% by the end of 2022, with the average mortgage rate to rise by 130 basis points between now and the end of 2023.
The bank has reiterated that debt servicing costs will increase over the next few years.
"Rates may not move up as much [as the OCR] However, mortgage interest rates could move up more quickly and peak at higher levels. For borrowers, we reiterate our earlier messages that it would be prudent to budget and prepare for higher future debt servicing costs."