ANZ has announced large increases to its fixed-term mortgage rates.

The bank will increase its standard one-year rate mortgage rate on Thursday by 54 basis points from 6.05 per cent to 6.59 per cent.

It will increase its two-year fixed term mortgage rate by 44 basis points from 6.35 per cent to 6.79 per cent.

Borrowers with more than 20 per cent equity in their homes pay less for their loans at ANZ.

The bank's 'special” one-year mortgage rate for higher equity borrowers is moving from 5.45 per cent to 5.99 per cent.

The increases followed Wednesday's announcement that annual inflation continued to run hot at 7.2 per cent.

A spokesperson from the bank says there has been ongoing volatility in global funding markets, and also a significant increase in wholesale market rates.

'With this in mind we are making changes to our fixed home loan rates whilst also updating our term investment rates to support customers to meet their savings and investment goals,” she says.

'Interest rates will continue to be reviewed in response to international and local market conditions.”

The bank also lifted term deposit rates, but less than home loan rates.

Its key 90-day term deposits rate for people with $10,000 or more invested will rise by 25 basis points to 2.15 per cent, and its one-year rate will rise by 40 basis points to 4.3 per cent.

On Wednesday independent economist Tony Alexander predicted banks would respond to inflation remaining stubbornly high by lifting their fixed term mortgage rates.

Alexander says borrowers should also brace for fixed rate loan increases in the next few days after Stats NZ announced prices rose 2.2 per cent​ in the September quarter, taking annual inflation to 7.2 per cent​, only just under the 7.3 per cent​ annual rate reported three months ago.

Alexander says banks had been holding back on lifting fixed home loan rates, despite funding costs rising.

Independent economist Tony Alexander says banks would be increasing their fixed-term home loan rates. Photo Ryan Anderson/Stuff.

'We are going to see a round of some pretty sizeable increases in fixed mortgage rates,” he says.

Bank economists are now predicting the Reserve Bank Te Pūtea Matua will lift the official cash rate (OCR) by 75 basis points next month, which ASB chief economist Nick Tuffley​ says would be followed by 50 basis point hikes in February and April.

- Rob Stock/Stuff.