Wellington, Aug 5 NZPA - ASB has become the first bank to hike its floating mortgage rate after the Reserve Bank of New Zealand raised the official cash rate by 25 basis points to 3 percent on July 29.

Interest.co.nz reported that ASB lifted its variable mortgage rate 25 basis points to 6.25 percent and its six month rate by 25 basis points to 6.35 percent. It cut its 18 month rate by 15 basis points to 6.60 percent and its two year rate by 10 basis points to 6.85 percent.

ASB subsidiary Sovereign also announced changes today. ASB is itself a subsidiary of Commonwealth Bank of Australia.

After news today that the unemployment rate rose to 6.8 percent in the June quarter ASB economists talked of a pause in the monetary policy tightening cycle.

"Today's data, alongside the recent run of soft domestic data, including downside to the dairy payout, firmly points to a pause in the tightening cycle.

"At this stage, we have pencilled in one more hike in September, but even then we only ascribe a 60 percent chance of a move. We expect a pause thereafter," ASB said in a report.