Popular one- and two‑year fixed rates remain about three percentage points below their 2022/23 highs, yet have already moved off their 2025 lows as wholesale markets price in higher future OCR settings. Floating rates are still the costliest way to borrow, putting more weight on how clients structure terms to manage cashflow.
Short terms steady for now, longer fixes under upward pressure
ASB economists judge that the OCR is now at the bottom of this cycle, with the first hike pencilled in for around September 2026. RBNZ is forecasting annual CPI of about 4.2% in the June quarter and has cautioned that “decisive and timely increases in the OCR would be required” if inflation expectations or wage growth fail to stay contained.
In the meantime, shorter terms such as floating and six‑month fixed are expected to hold near current levels before gradually rising.
Longer fixed mortgage rates are more sensitive to global markets and longer‑term inflation expectations. With major central banks, including the Reserve Bank of Australia, lifting policy rates, ASB believes fixed terms of one year and beyond are likely to remain under upward pressure through 2026.
The bank reminds borrowers that “it’s not all about nabbing the lowest fixed rate.” Trade‑offs between certainty, flexibility, and cost will depend on how quickly RBNZ moves and how funding markets respond.