Survey reveals number of borrowers expecting lower interest rates has more than halved
Fear of higher mortgages pushes fence‑sitters into action, ASB reports
New Zealand’s housing market is entering a new phase as expectations swing from falling interest rates to looming hikes, even while confidence in future house price gains rebuilds across the country, ASB’s Yen Nguyen and Kim Mundy (pictured left to right) reported.
The latest ASB Housing Confidence survey for the three months to January shows a sharp pivot in rate views. The share of respondents expecting lower interest rates has more than halved, while those anticipating increases have doubled, leaving only a slim net 5% still expecting rate cuts over the next year.
This shift follows the Reserve Bank’s move to cut the official cash rate (OCR) to 2.25% in November and then signal that the easing cycle is effectively done. As the report puts it, “The steer from the RBNZ is: expect the OCR to go up, just not immediately.” In a more nuanced take, Westpac chief economist Kelly Eckhold describes a “more dovish” RBNZ tone that lifts the bar for early hikes and points to a weaker New Zealand dollar.
Buyers weigh mortgage moves as sentiment stays upbeat
The change in expectations is already being felt in the mortgage market, with fixed-term rates lifting off their recent lows.
For mortgage advisers, that shift marks a pivot from chasing ever‑cheaper deals to reassessing loan structures, as ASB signals the era of falling rates may have run its course.
For potential buyers, the psychology is important: if households believe borrowing costs will rise, that can bring forward purchase decisions, particularly for first-home buyers and “fence-sitters” who have been waiting for the bottom in rates.
Buying sentiment remains resilient. A net 27% of respondents say it’s a good time to buy, well above historical norms and remarkably steady over the past year. The market backdrop is clearly buyer-friendly, with a decade-high stock of listings and plentiful choice encouraging would‑be purchasers to stay engaged even as rate expectations shift.
House price optimism lifts across regions
Attitudes towards future house prices have flipped from 2025’s downbeat tone.
A net 30% of respondents now expect house prices to increase over the coming 12 months, up from 17% in the previous quarter and above the long‑run average.
South Islanders remain the most confident, helped by standout 2025 gains in some southern markets, while Auckland has recorded the biggest jump in optimism, suggesting the country’s largest city may be shaking off its recent price malaise.
High inventory caps any rapid rebound
Even so, ASB still sees only muted price growth ahead. High inventory is a powerful brake on rapid appreciation. New listings continue to climb, and the total number of homes on the market is sitting around decade highs.As the survey notes, “The market has clearly favoured buyers, and this condition is likely to remain for some time.”
Taken together, elevated buying sentiment, rising expectations for both house prices, and interest rates, and a gradually improving economy and labour market point to a measured lift in housing activity through 2026, rather than a repeat of the 2020–21 boom.
Read the ASB Housing Confidence report in full here.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
