Six-month fixed is cheapest, but economists expect every term to rise
ASB economists expect mortgage rates to keep climbing across every term, even after the Reserve Bank of New Zealand (RBNZ) unexpectedly left the official cash rate (OCR) unchanged last month.
In its Home Loan Rate Report, ASB noted that after lifting the OCR in July and September from a low of 2.25%, the RBNZ held it at 2.75% on 28 October. The decision surprised ASB, other forecasters and financial markets, which had expected another hike. It was a close call, with the Monetary Policy Committee splitting 4–3 and three members favouring a hike. ASB still expects further increases this year and in early 2027, although it acknowledged uncertainty about how fast and how far rates will rise.
Where ASB’s carded rates sit
ASB’s six-month fixed rate is its cheapest, at 4.79%, followed by one year at 4.99% and two years at 5.35%. Longer terms range from 5.59% for three years to 5.75% for five years, while floating sits at 6.29%. One-year fixed rates are about 2.5 percentage points below their 2023 peak, but all terms have lifted from their 2025–26 lows.
Upward bias across all terms
The report, by ASB senior economist Chris Tennent-Brown, says that despite conflicting economic signals, “mortgage rates are expected to go up, not down”.
ASB’s outlook is for both floating and fixed rates to rise in the short and longer term. Shorter terms will be driven mainly by OCR moves, while longer fixed terms face pressure from inflation expectations and offshore central banks. The report notes that the Reserve Bank of Australia has raised its cash rate five times in 2026.
Wholesale rates eased over the past week, with the two-year swap rate down from 4.01% to 3.75%, but they remain well above year-earlier levels.
Cotality NZ shares ASB’s view, saying in its latest Home Value Index commentary that more mortgage rate rises appear likelier than stability or falls.
Strategy over chasing the lowest rate
For advisers, the report’s main message is about planning rather than timing. ASB said fixed rates move significantly between OCR announcements, and that borrowers need to weigh flexibility, repayment timeframes and their tolerance for rate changes against cost.
The report said it’s “not all about nabbing the lowest fixed rate.”
ASB’s economists expect rates to settle well above the record lows seen during COVID-19. Shorter terms suit borrowers who want to review their loans often, while longer terms offer certainty at a higher price. ASB also reminded borrowers that break costs, loan-to-value ratio (LVR) restrictions and debt-to-income (DTI) limits can all affect their options.
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