Interest rates have been one of the biggest talking points for New Zealand borrowers over the past few years. Here's where things stand as at the middle of 2026, and what it could mean for your mortgage.
Where the OCR sits now
At its May 2026 review, the Reserve Bank held the Official Cash Rate (OCR) at 2.25% — the third consecutive decision to keep rates on hold. After a long run of cuts, the easing cycle has paused.
Importantly, the Reserve Bank has signalled that the next move is now more likely to be up than down. Higher global oil prices are expected to push inflation back towards the top of the target band later in the year, and some commentators expect the first increase could come in the second half of 2026.
What's happening with home loan rates
Fixed mortgage rates have settled well below their peak. As at mid-2026, the most competitive one-year fixed rates from the main banks sit broadly in the high-4% range, with shorter terms (six months and one year) often the sharpest on offer.
Many bank economists expect one-year fixed rates to stay in roughly the 4.5%–4.8% band through the rest of 2026, though forecasts vary and can change quickly. These are market commentary, not guarantees — the actual rates available to you will depend on the lender, your equity and your circumstances.
Lending rules have eased slightly
On 1 December 2025, the Reserve Bank eased its loan-to-value (LVR) restrictions. Banks can now write a larger share of their new lending to borrowers with smaller deposits — up to 25% of owner-occupier lending above 80% LVR, and up to 10% of investor lending above 70% LVR. In practice, this gives banks a little more flexibility, particularly for first home buyers.
Debt-to-income (DTI) limits, introduced in 2024, remain unchanged.
What this means if you're deciding how to fix
With the OCR on hold and the Reserve Bank hinting at possible increases, the short-versus-long fixing question is finely balanced:
- Shorter terms (6–12 months) keep you flexible and let you re-fix sooner — useful if you expect rates to keep easing, but exposed if they rise.
- Longer terms (2–3 years) lock in more certainty — valuable if you want to protect against increases, at the cost of flexibility.
- Many borrowers split their loan across more than one term to balance certainty and flexibility.
There's no single right answer — the best structure depends on your budget, your plans and how much certainty you want.
Talk it through before you fix
If you have a fixed term rolling off soon, it's worth reviewing your options before you simply accept your bank's first offer. As mortgage advisers, we can compare lenders and help you choose a structure that fits your situation.
This article is general information only and is current as at June 2026. It is not personalised financial advice and does not take your individual circumstances into account. Interest rate forecasts are commentary and may not eventuate. Lending criteria, rates and Reserve Bank settings can change at any time. Please seek advice from a licensed financial adviser before making any decisions.