Interest rates on mortgages and other loans will rise by between 20 and 60 basis points as a result of a Reserve Bank's decision to require banks to put an extra $20 billion of capital into their businesses, according to different estimates.

The Reserve Bank put the figure at 20 basis points, while ANZ believed the impact could be up to triple that.

Westpac took the middle ground, saying it expected the gap between the interest banks paid to savers and charged lenders to widen out by 40 basis points.

But BNZ research head Stephen Toplis suggested nervous banks had already become more conservative about their lending habits in the run up to the bank capital review and might breathe a "sigh of relief" the final decision was not as harsh as they had first feared.

The Reserve Bank stuck to its guns on Thursday in demanding the big four Australian-owned banks find about another $20 billion to put into their businesses to reduce the risk of them failing in a crisis.

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That is despite objections from banks including ANZ that the change is unnecessary.

ANZ, ASB, BNZ and Westpac will need to increase the amount of "tier one" capital they hold to 16 per cent of their risk-weighted assets, as the Reserve Bank had proposed during consultations.

But in a significant compromise, banks will be able to raise up to about $9 billion of the total by issuing redeemable preference shares to investors.

That is rather than having to raise all the $20b through additional equity or by retaining more of their profits.

That concession could make it cheaper for banks to raise the extra capital.

In another compromise, the big four banks will have seven years – starting from July – to find the extra billions, rather than five years as the Reserve Bank had originally proposed.

But ANZ's forecast would put the extra cost three times higher.

The Reserve Bank said that if average interest rates on loans went up 20 basis points by the time the rule change was fully implemented in 2027, that might mean a $5 increase in fortnightly payments on a $100,000, 30-year mortgage.

But ANZ's forecast would put the extra cost three times higher.

The Reserve Bank said in its report into bank capital that a stronger banking system would mean New Zealand would be better able to survive large shocks.

"We are doing this to protect New Zealand from the significant harm that accompanies a banking crisis," it said.

"We want to provide greater protection for depositors – and we want the public to be confident that when they put their money into banks, they can get it out again.

"Because banks are part of the fabric of our daily lives, if a bank fails then all of society may suffer – not just the bank's customers."

ANZ had estimated the ongoing impact of the Reserve Bank's original proposals would be a $3 billion annual hit to the economy, and up to a $9b hit in the short term.

The Reserve Bank accepted higher capital requirements would come "at a cost".

But it said the trade-offs for banks were not simple, and its estimate was that its final decision would raise annual GDP growth by more than $1b overall, mainly because of the reduced risk of bank failure.

BusinessNZ chief executive Kirk Hope and the New Zealand Initiative think-tank immediately called for a further round of consultations on the Reserve Bank's decision.

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New Zealand's major financial institutions were already well-capitalised and managed, Hope said.

"Imposing additional requirements on banks will adversely harm their customer base and the costs of reducing risk will be passed on to businesses, households and rural borrowers," he said.

"Given the significance of this on consumers, households, businesses, and the rural sector that will ultimately bear the brunt of increased costs and/or restrictions on capital. A further round of consultation is needed," he said.

But Reserve Bank governor Adrian Orr ruled that out at a media conference.

"We have done our work. These decisions are final," he said.

National Party finance spokesman Paul Goldsmith said the increased capital requirements would add more pressure "on an already slowing economy".

"The two primary effects of today's decision will be higher borrowing costs than would otherwise have been the case and businesses and farmers will find it harder to access the funds they need to grow," he said.

ANZ said the Reserve Bank's final decision was in line with its previous proposals "but some aspects are softer".

"The Reserve Bank suggests the impact on the economy will be negligible, with an impact of about 20 basis points on lending rates," ANZ said.

"We expect a larger impact on both retail interest rates of 30 to 60 basis points spread unevenly by sector and subject to considerable uncertainty, and credit availability, than the Reserve Bank does," it said.

That would mean a more negative impact on GDP, it said.

But both ANZ and BNZ said the compromise the Reserve Bank had made with regard to redeemable preference shares and what would count as tier-one capital were important.

Any impact on lending rates would also be difficult to isolate because the bank capital changes would occur "over a long time period where many other offsetting forces will be at play", ANZ also noted.

BNZ's Toplis said it was fair to say that a "nervous banking sector" had probably already become a bit more conservative in its lending habits as it toyed with "worst case" scenarios from the review.

"The 'best news' from the announcement is that the uncertainty around bank capital requirements is now largely behind us," he said.

They have a priority claim on banks' payouts and can be bought back by the banks.

Redeemable preference shares are financial instruments that have some of the characteristics of traditional shares, but other features that more closely resemble loans.

They have a priority claim on banks' payouts and can be bought back by the banks.

The Reserve Bank had initially proposed they shouldn't be counted as tier-one capital for the purposes of its new rules.

But it relented after deciding the risks associated with redeemable preference shares were "more manageable" in the context of the overall boost to bank capital.

Smaller banks, including Kiwibank, will only need to maintain a 14 per cent tier-one capital ratio, rather than a 15 per cent ratio as the Reserve Bank had originally proposed.

That means they will be "more advantaged" relative to the big four than the Reserve Bank had originally proposed.

The combined amount of extra capital smaller banks will need to find over seven years is expected to be in the hundreds of millions of dollars.

The changes could mean lenders other than the big four banks take on responsibility for some more of the country's lending.

Orr suggested that would be no bad thing given the current strong market reliance on the big four banks.

Bayleys Real Estate managing director Mike Bayley said the commercial and industrial property market was attracting increased interest from non-bank lenders.

That interest would only strengthen in response to newly-bolstered capital requirements on banks, he forecast.