We’ve got our first Official Cash Rate (OCR) announcement of the year coming up in a couple of weeks’ time, on 18 February.
The last we heard from the Reserve Bank (RBNZ) on rates was back in November, when they delivered a 0.25% reduction to take the OCR down to 2.25%—and setting the expectation that it was the last cut we'd be getting for this interest rate cycle.
To the banks, it was really a signal to start increasing mortgage rates again, and most of them have now done that.
The big news since then has been the release of our latest inflation data, for the December 2025 quarter, which came out late last month.
Annual inflation is currently running a little higher than expected at 3.1%, which means it’s now officially outside the upper limit of the RBNZ’s 1-3% target range.
Off the back of the news, we’ve now got a number of bank economists saying they expect to see two to three OCR increases over the course of the year—which would of course flow through to mortgage rates.
Where are interest rates sitting currently?
For now, we’ve still got pretty much all the banks offering a one-year rate of 4.49%.
BNZ has set itself apart in the shorter-term space, though, offering a six-month rate at 4.49%—which is a pretty interesting move.
Looking at medium term rate, it’s much of a muchness across the banks—with most offering a two-year rate of 4.69% and a three-year rate of 5.09% or thereabouts.
Longer term rates are starting to creep up, with the four- and five-year terms now edging closer to the 5.50% mark.
What should borrowers be thinking about in this environment?
It’s always a good idea to chat with an expert mortgage broker for advice on the best way to structure your loan, depending on your personal situation.
Broadly speaking, though, those two- and three-year rates aren’t a bad option, just letting you lock in some certainty over the next little while. If you want to take advantage of those low short-term rates, you might choose to fix a small portion of your mortgage for six months—and focus on paying that down as quickly as possible.
Check in again next week for the latest news on New Zealand interest rates.
