There's a lot of noise out there at the moment.
Global tension, rising fuel prices, economists talking about inflation, and attention-grabbing headlines that can make everything feel a bit uncertain.
So let's have a look at what's going on here, and what it means for your mortgage.
Good news first (we love that!)
Rates have come a long way.
Just over a year ago, the OCR (Official Cash Rate) was sitting at 5.5%. The Reserve Bank cut it six times through 2025, bringing it all the way down to 2.25%.
That's a massive shift. And if you've refixed recently, or you're due to refix soon, you're likely landing on something a lot more comfortable than what you were on before.
This is real money back in people's pockets, and for many of us, it's also helping make more progress quicker on principal, and opening up affordability for more people wanting to buy.
So why is everyone talking about rates going up again?
Good question.
The RBNZ held the OCR at 2.25% in April, and there's a reason for the pause.
The conflict in the Middle East has pushed up global oil prices. That flows through to fuel, transport, and the cost of pretty much everything. Inflation in New Zealand ticked up to 3.1% at the end of 2025, just outside the Reserve Bank's target band of 1-3%.
For the section quarter of 2026, inflation is expected to hit over 4% - which is definitely outside that band.
So yes, there's some upward pressure.
But the thing is, a big chunk of that inflation is coming from things like electricity, council rates, and fuel. Things the Reserve Bank can't actually fix by raising interest rates, because we all still have to pay for those things.
And the economists we respect are saying the same thing - this pressure is largely temporary, and medium-term inflation is still expected to land back around 2% by the end of 2026.
The RBNZ is watching closely. But they're not panicking.
Will rates go up from here?
Yes, but probably not like we saw a few years ago.
A few of the major banks are forecasting one small OCR increase before the end of 2026. We're talking 0.25%. One small move, after a two-percentage-point drop.
The overall direction of this cycle has still been strongly in borrowers' favour.
And the RBNZ has been clear - if medium-term inflation stays on track, they'll keep things accommodative.
The door isn't closed on further cuts either, if the economy needs it. But they'll be really careful not to yo-yo too much, go to early or too late with changes.
What's happening in the property market
It really depends on where you are.
At a national level, property values have been fairly flat. But underneath that headline there's quite a bit of variation.
Auckland and Wellington are sluggish. Weak population growth and softer employment are keeping a lid on things there.
Parts of the South Island - Christchurch, Southland, Otago - are actually showing growth. Christchurch in particular has great affordability, solid infrastructure, and is attracting more corporate investment.
Sales volumes are down year-on-year in most centers. But listing stock has also pulled back, which means there's a bit more balance between buyers and sellers right now.
For Waikato and the regions?
The rural economy is one of the stronger parts of the NZ picture. Strong commodity prices and good farm economics are supporting confidence here.
We are seeing plenty of purchases, turnover of housing stock and agents are still reporting auction clearance rates.
What should you actually do?
Here are three things we're telling clients right now.
1. Don't wait too long to refix.
Mid term rates have risen slightly in 2026, and that has increased cost for people.
There is likely some increases coming mid-year so once your banking app notifies you, consider making a call fairly quickly. Think about the level of flexibility you need versus how much cost you're willing to take on.
For many people, the mid term is a good place to be, but chat to us if you're unsure.
2. If you're thinking about buying, the market's working in your favour in many places.
More balance between buyers and sellers means less pressure, more time to make good decisions.
If your personal situation is right, this is a reasonable time to move.
For investment property purchases, make sure you do your research around location, yield and strategy so you're set up for success.
3. Don't let global noise stall a local decision.
Yes, what's happening overseas matters. But uncertainty kills growth, and waiting indefinitely isn't a strategy.
Mortgage affordability is sitting at roughly the average of the last 20 years, which means it's still a reasonably good time to borrow money.
The upcoming election always stalls action - if you're ready, you can pick up a great deal.
The bottom line
2026 was meant to be the year of recovery.
The Middle East conflict has made things a bit more complicated, and we'll likely see slower momentum in the first half of the year.
But the foundations are still there. Lower interest rates, more banks actively lending, and a property market that's stabilising rather than falling.
We're not at the other side yet. But we're on the right path.
If you want to talk through what any of this means for your home loan specifically, reach out to the team. We'd love to help. 👇
