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Australian New Zealand Bank (ANZ) Fiji customers should expect a 0.5 per cent increase in lending rates from Friday, February 20.
ANZ increased its variable lending rates following sustained increases in retail and wholesale deposits rates associated with increased demand for a reducing pool of market liquidity.
The bank's new business index rate will be 10.75 per cent and variable residential and investment property loans will be 10.00 per cent.
New fixed loan rates will also increase effective this week.
ANZ CEO Central Pacific and General Manager Fiji Robert Bell said: "We understand the impact higher rates have on customers and have worked hard to absorb the sustained increases in retail and wholesale deposit rates for several months".
He said Fiji's liquidity had reduced from highs of $300 million 18 months ago to an average of less than $50 million in recent months.
He said the Reserve Bank of Fiji (RBF) flagged twice in January that this tightening in liquidity had placed significant upward pressure on deposit pricing and that lending rates would follow.
"The fall in liquidity can be attributed in part to an increase in business lending in the later half of 2008, Fiji's increasing trade deficit and a significant slowing of the economies of Fiji's main trading partners," Bell said.
"The current lack of liquidity in the market and current global credit crisis is likely to see a sharp decline in credit growth in Fiji over the coming months and further interest rate rises in the short to medium term if liquidity remains at the present low levels.
"This is the first rate rise following 7 consecutive rate decreases in Fiji throughout late 2007 and early 2008."
He said the bank had a range of assistance measures in place for customers experiencing hardship.
And he added the assistance was designed to address specific customer circumstances and included principle repayment holidays of up to three months or restructuring of facilities.
