The final OCR announcement of 2025 dropped to 2.25% and most recently on 18 February 2026 has been held. Most economists agree we’ve reached the bottom of the rates cycle and there will be a period of relative stability, especially in the short term rates where the outlook is fairly clear.
The Reserve Bank has commented that rates are likely to rise towards the end of 2026, which is a view mirrored by the major banks and is a review of the original position which was 2027 being the start of the next hiking cycle. Inflation has actually increased again slightly, as has the cost of money for banks and that is being reflective in any rate pricing beyond 12 months, so watch this space as the RBNZ has the job to balance that inflationary pressure with activating the economy and encouraging businesses to expand and prosper in 2026.
There is also some global uncertainty with the larger economies, which is filtering through, as well as a New Zealand election upcoming in 2026 which are indirect factors not officially in the Reserve Bank’s remit but could be considered.
It’s really important to bear in mind when you hear the word “increase” that this is not expected to be the large hikes we saw following the Covid period, instead the Reserve bank will be very mindful of managing cost for borrowers with inflationary pressures. So it’s unlikely we’ll see rates in the late 6% or 7% range any time soon.
The OCR has more bearing with the shorter term rates so with the wider global influences a bit less certain, this has led to the longer term rates being a bit less stable and some small increases in these. It is likely we’ll see the shorter term rates remain stable for a period and potentially slowly starting to increase later this year whilst the longer term rates being a bit more variable but still cheaper than where they have been over the past couple of years. This makes it more of a balance of where the best value lies in interest rates and varies based on your situation overall.
Since Christmas, we have seen some changes to the mid-long term rates of 3-5 years, back up into the 5% range. While this is higher than October/November 2025, it does still represent very good long term value for borrowers who want certainty and stability for the longer term.
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