Entry‑level growth gives way to stronger 2027 rebound
New Zealand’s economy is expected to move from a shallow recovery in 2026 to a more solid expansion in 2027, with lower interest rates, a softer New Zealand dollar, and improving exports reshaping the backdrop for mortgage brokers and their clients.
The latest NZ Institute of Economic Research (NZIER) Consensus Forecasts show annual GDP growth of 0.8% in the year to March, picking up to around 3% in the year to March 2027 as easier monetary conditions gain traction.
The September 2025 GDP result, following a June quarter contraction, “suggests that the New Zealand economy has turned”, with NZIER’s Quarterly Survey of Business Opinion activity indicators also pointing to a recovery taking shape.
Major banks are seeing the same pattern, with major banks expecting December‑quarter 2025 GDP growth of around 0.3%–0.4% and a second consecutive rise in per‑capita output, supported by strong exports, services, and tourism.
Households cautious but rate relief underpins gradual spending lift
Despite the brighter headline outlook, the consensus view on household spending has been revised lower for both 2026 and 2027.
NZIER notes that many households on one‑ or two‑year fixed mortgage rates are still expected to roll onto lower mortgage rates over the next couple of years, supporting a “continued recovery in household spending”, but warns this will be “gradual over the coming year, given the soft labour market is keeping households cautious.”
Consensus forecasts also show the residential investment outlook being revised higher for the March 2026 and 2027 years, in line with a pick‑up in dwelling consents and NZIER’s measure of architects’ workload, which points to “an increased pipeline of housing construction work in the next 12–24 months.” That should support credit demand from developers and property investors as the construction pipeline rebuilds.
Exports and inflation point to higher rates later
On the external side, forecast export growth has been revised higher for 2026 and 2027 as demand for commodity exports such as meat and dairy remains firm despite global trade uncertainty.
A weaker NZD trade‑weighted index outlook – expected to track between roughly 67.8 and 70 – should further support exporters and regional incomes, with flow‑on benefits for rural borrowers and property investors.
However, forecast annual CPI inflation has been lifted to 2.8% for March 2026 and 2.3% for March 2027, reflecting “the recent rise of annual CPI above the 1% to 3% inflation target band and surge in global oil prices in the wake of the US‑Israel war against Iran.”
Consensus interest‑rate projections also factor in the Reserve Bank’s signal that it will likely start raising the OCR around December 2026, with “more rapid interest rate increases between 2027 and 2028, given the risk of high inflation.”
For mortgage advisers, that means the current window of relatively lower mortgage rates may not last, and client strategies will need to balance near‑term opportunities with the risk of a higher‑rate environment later in the decade.
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