If you’re watching mortgage rates and feeling like every bank tells a different story, you’re not alone. The Reserve Bank of New Zealand has held the OCR at 2.25%, yet several major banks now predict fixed rates will climb toward 5% later in 2026 (Goodwins (law firm, NZ mortgage specialists)). This guide cuts through the conflicting bank forecasts to help you decide which mortgage term might suit your situation.

4 related posts

Current Official Cash Rate (ANZ forecast): 2.25% ·
Forecast fixed mortgage rates (ANZ): Rising to ~5% by late 2026 ·
Expert expectation (Westpac): Mortgage rates to rise through 2026

Quick snapshot

1Confirmed facts
2What’s unclear
  • Whether mortgage rates will drop to 3% again anytime soon (Goodwins)
  • Exact timing and scale of further rate increases through 2026 (Goodwins)
3Timeline signal
4What’s next

Five key facts capture the current mortgage landscape in New Zealand, from the official cash rate to the number of OCR reviews scheduled this year.

Metric Value
Current Official Cash Rate 2.25% (ANZ forecast for 2026)
Forecast fixed mortgage rate (ANZ) Rising to ~5% over next 12 months
Expert consensus Rates expected to rise through 2026 (Westpac, ANZ)
Number of OCR reviews per year 7
Next OCR review month May 2026 (after April review)

Will NZ mortgage rates go up in 2026?

How do house prices relate to mortgage rate predictions?

  • Trade Me Property reports experts believe NZ interest rates have likely bottomed out, with short-term rates possibly dipping slightly in early 2026 before plateauing or rising (Trade Me Property (NZ’s largest property marketplace)).
  • House prices tend to soften when borrowing costs rise, creating a feedback loop: higher mortgage rates reduce buyer demand, which can slow price growth, but the RBNZ focuses on inflation, not house prices.

What did Westpac and ANZ forecast for 2026?

  • Westpac chief economist Kelly Eckholm expects mortgage rates to rise through 2026 (Goodwins (law firm, NZ mortgage specialists)).
  • ANZ forecasts all fixed mortgage rates to rise to around 5% over the next 12 months (Goodwins (law firm, NZ mortgage specialists)).
  • House prices may be affected by rising rates, as higher borrowing costs reduce affordability.
The trade-off

Home buyers face a narrowing window: lock in today’s ~4.65% 1-year fixed rate, or gamble that ANZ’s and Westpac’s rising forecasts are wrong and wait for cheaper borrowing later.

The implication: both major bank forecasts point in the same direction — higher — even if they disagree on timing. Waiting for a drop back to 3% rates seems unsupported by current data.

Will interest rates drop to 3% again?

What would need to happen for rates to fall to 3%?

  • ANZ expects the OCR to stay at 2.25% throughout 2026 (Canstar (NZ financial comparison site)). No major bank is forecasting a return to 3% mortgage rates in the near term.
  • MoneyHub NZ says current forecasts suggest the OCR may stabilise between 2.00% and 3.50% over the next two years, which would correspond to fixed mortgage rates from roughly 3.50% to around 6.00% (MoneyHub NZ (consumer finance guide)).

Historical OCR lows and current trajectory

  • RBNZ data shows current standard rates above 5% (Opes Partners (NZ property investment advisors)).
  • The lowest 1-year fixed rate as at Monday 01 June 2026 is 4.65% (Opes Partners (NZ property investment advisors)).
  • Westpac expects the OCR to rise toward 3% by the end of 2028 (Goodwins (law firm, NZ mortgage specialists)), meaning near-term sub-4% rates are not in official forecasts.
Bottom line: Borrowers hoping for a return to 3% home loans should reset expectations. No major NZ bank or the RBNZ has signalled that path through 2026. Short-term fixes offer flexibility; long-term fixes offer protection against the forecast rises.

Few forecasters expect a return to 3% in the near future.

What are the key OCR dates to watch in 2026?

How many OCR reviews does the RBNZ hold each year?

  • The Reserve Bank of New Zealand typically holds 7 OCR review meetings per year (Squirrel (NZ mortgage advisors)).
  • Next decision after April 2026 is likely in May 2026.

How could each meeting affect your mortgage rate?

  • Each meeting is an opportunity for the RBNZ to adjust the OCR, which directly influences variable rates and indirectly affects fixed-rate pricing.
  • The Squirrel article highlights key dates for borrowers (Squirrel (NZ mortgage advisors)).

The pattern: with most banks forecasting a flat OCR through 2026, the real action is in fixed-rate pricing, which moves on bank expectations, not just the OCR. Missing a single OCR date won’t break your strategy — but ignoring the trend toward higher fixed rates might.

Should I fix my mortgage for 2 or 5 years?

Pros and cons of a 2-year fix

Pros and cons of a 5-year fix

  • Long-term fixes provide certainty but may lock in higher rates if forecasts shift (Goodwins (law firm, NZ mortgage specialists)).
  • Current 5-year rates sit at 5.79% (Opes Partners (NZ property investment advisors)).

What the experts recommend for 2026

  • ANZ expects rates to rise, so a longer fix could protect against further increases (Goodwins (law firm, NZ mortgage specialists)).
  • Westpac expects the OCR to rise toward 3% from mid-2027, making a 5-year fix a hedge against delayed but likely hikes (Canstar (NZ financial comparison site)).

The table below highlights the key differences between a 2-year and 5-year fixed mortgage under current forecasts.

Factor 2-year fixed 5-year fixed
Current lowest rate (June 2026) 5.19% 5.79%
Protection against rate rises Partial (2 years) Full (5 years)
Flexibility if rates fall High (renew sooner) Low (locked in)
Risk level under current forecasts Moderate Low (predictability)
The upshot

ANZ expects rates to rise, so a longer fix could protect against further increases. But if the economy turns and rates drop, a 5-year fix leaves you paying above-market. The sweet spot for many: a 2-year fix lets you reassess when the trajectory becomes clearer.

The choice ultimately depends on your willingness to bet on the forecast.

Should I go fixed or variable mortgage in 2026?

How variable rates track the OCR

  • Variable rates are directly influenced by OCR movements (Canstar (NZ financial comparison site)).
  • The average floating rate as at Friday 29 May 2026 is 5.72%, while the average 1-year fixed rate is 5.00% (Opes Partners (NZ property investment advisors)).
  • The floating rate is 0.72 percentage points higher than the 1-year fixed rate (Opes Partners (NZ property investment advisors)).

Fixed rate advantages in a rising-rate environment

  • Fixed rates are rising according to bank forecasts (Goodwins (law firm, NZ mortgage specialists)).
  • Westpac predicts rising rates, suggesting variable may become costlier over time (Canstar (NZ financial comparison site)).
  • Fixing now locks in today’s rates before further forecast increases materialise.

Upsides

  • Variable: directly benefits from OCR cuts if they happen
  • Variable: no break fees if you need to switch lenders
  • Fixed: predictable payments for budgeting

Downsides

  • Variable: currently 0.72% more expensive than 1-year fixed
  • Variable: exposed to OCR increases from mid-2027
  • Fixed: break fees if you need to exit early

The catch: variable rates are already more expensive than 1-year fixed rates in May 2026. If the OCR stays flat through 2026, the variable borrower simply pays more each month. The case for variable only wins if rates drop significantly — which no major bank currently forecasts.

Timeline: Key dates and forecasts

  • February 2026 — First OCR review of 2026; OCR held at 2.25%
  • April 2026 — Second OCR review; no change expected per ANZ
  • May 2026 — Third OCR review; market watches for any shift in guidance
  • Mid-2026 — Fixed mortgage rates forecast to rise toward 5% (Goodwins (law firm, NZ mortgage specialists))
  • July, August, October, November 2026 — Remaining OCR reviews; potential for adjustments if inflation changes

These dates are markers, not guarantees of rate movements.

Clarity: What’s confirmed and what’s not

Confirmed facts

  • ANZ expects OCR to stay at 2.25% throughout 2026 (Goodwins (law firm, NZ mortgage specialists))
  • Westpac expects mortgage rates to rise through 2026 (Goodwins (law firm, NZ mortgage specialists))
  • RBNZ holds 7 OCR review meetings per year (Squirrel (NZ mortgage advisors))

What’s unclear

  • Whether mortgage rates will actually drop to 3% again (Goodwins (law firm, NZ mortgage specialists))
  • Exact timing and magnitude of further rate increases
  • Impact of global economic conditions on NZ OCR decisions
  • Current 1-year fixed lowest rate: 4.65% (as at June 2026) (Opes Partners (NZ property investment advisors))

Borrowers should monitor these uncertainties closely.

What the experts are saying

“Westpac chief economist Kelly Eckhold expects mortgage rates to rise through 2026.”

Goodwins (law firm, NZ mortgage specialists)

“ANZ forecasts all fixed mortgage rates will rise to around 5% over the next 12 months.”

Goodwins (law firm, NZ mortgage specialists)

“The floating rate is 0.72 percentage points higher than the 1-year fixed rate.”

Opes Partners (NZ property investment advisors)

“Short-term rates may dip slightly in early 2026 before plateauing or rising.”

Trade Me Property (NZ’s largest property marketplace)

What to watch

ANZ forecasts a rising path, but Squirrel’s model predicts the 1-year fixed rate could fall to around 4.1% in early 2026 (Squirrel (NZ mortgage advisors)). That divergence is the core tension borrowers must navigate.

For the average New Zealand homeowner with a $500,000 mortgage, the decision between fixed and variable is clear: locking in a 1-year fixed rate at 4.65% saves roughly $3,600 per year compared to the current average floating rate of 5.72%, assuming rates don’t move. If ANZ and Westpac are right and rates rise, locking in now protects against even higher costs later. If they’re wrong and rates fall, a short-term fix lets you capture the upside at renewal. The safest bet for borrowers who want predictability: fix for 2 years at 5.19% and reassess when the 2026 OCR trajectory becomes undeniable.

Additional sources

youtube.com, threefold.co.nz

For a more detailed breakdown of these forecasts, including expert opinions from major banks, see mortgage rate predictions NZ.

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Frequently asked questions

What is the official cash rate (OCR) and how does it affect mortgage rates?

The OCR is the interest rate set by the Reserve Bank of New Zealand that influences the cost of borrowing across the economy. When the OCR rises, banks generally increase their mortgage rates; when it falls, rates tend to follow. Variable rates are most directly linked to the OCR, while fixed rates also factor in bank funding costs and future OCR expectations.

How often does the Reserve Bank of New Zealand review the OCR?

The RBNZ typically holds 7 OCR review meetings per year, approximately every 6-7 weeks. Each meeting can result in a rate change, hold, or new guidance that affects mortgage pricing.

What factors influence mortgage rate predictions in New Zealand?

Key factors include the OCR level, inflation data, employment figures, global economic conditions, bank wholesale funding costs, and competition among lenders. Bank economists also produce forecasts based on their models of these inputs.

How do fixed and variable mortgage rates differ?

Fixed rates lock in a set interest rate for a chosen term (e.g., 1-5 years), providing predictable payments. Variable (floating) rates change as the OCR changes, offering flexibility but less certainty. Currently, fixed rates are generally lower than variable rates in NZ.

Should I break my current fixed term to refix at a lower rate?

Breaking a fixed term incurs a break fee, which may be substantial if wholesale rates have fallen. Compare the break fee cost against the potential savings from refixing at a lower rate. If savings exceed the fee, it may be worthwhile, but check with your lender for a precise calculation.

What is the difference between a 2-year and 5-year fixed mortgage?

A 2-year fix offers lower current rates (5.19%) and flexibility to reassess sooner. A 5-year fix (5.79%) offers longer payment certainty but locks you in at a higher rate if forecasts shift lower. Under current forecasts, a longer fix protects against expected rate rises.

How do house price trends relate to mortgage rate changes?

Higher mortgage rates reduce borrowing capacity, typically cooling housing demand and softening prices. Conversely, falling rates can boost demand and prices. However, the RBNZ targets inflation, not house prices, so rate decisions prioritise the broader economy.