New Zealand Mortgage Rates Rise as OCR Hikes Loom: Late April 2026 Market Update

Executive Summary

New Zealand’s mortgage landscape is shifting rapidly as rising inflation and geopolitical tensions drive wholesale borrowing costs higher. Major lenders have begun lifting fixed mortgage rates, and economists now predict the Reserve Bank will raise the Official Cash Rate (OCR) starting in July 2026 to combat re-accelerating inflation.

Key Takeaways

• ASB has raised fixed home loan rates across one- to five-year terms by up to 20 basis points, citing volatile global markets and rising wholesale costs.
• Economists from ANZ and Westpac warn that inflation could peak near 4.5% by mid-2026, prompting forecasts of up to three OCR hikes this year.
• Smaller property investors are retreating, with 38% planning to sell due to increased running costs, higher council rates, and economic uncertainty.
• A supply crunch has hit the ultra-luxury housing segment, spurred by visa changes driving international demand for properties over $5 million.

Market Breakdown

Rising Mortgage Rates and OCR Forecasts

The period of bottoming mortgage rates has officially ended. In response to global financial volatility and the recent oil shock, wholesale funding pressures have intensified. This week, ASB increased its fixed mortgage rates by 6 to 20 basis points across one- to five-year terms, pushing its two-year fixed rate to 5.25%. Economists at ANZ, BNZ, and Westpac agree that mortgage rates are unlikely to fall meaningfully in the near term.

Inflation, which sat at 3.1% in the March quarter prior to the latest oil shock, is now expected to re-accelerate. Westpac forecasts headline inflation to approach 4.5% by mid-2026. Consequently, financial markets and major bank economists anticipate the Reserve Bank of New Zealand (RBNZ) will begin lifting the Official Cash Rate from its current 2.25% as early as July. ANZ predicts three OCR hikes this year, projecting the cash rate to reach 3.00% by year-end.

Mainstream Property Market Stagnation

Broader housing market confidence remains muted. In the first quarter of 2026, $54 million was wiped off asking prices across New Zealand as sellers adjusted expectations to match a clear buyer’s market. ANZ economists forecast an overall 2% decline in house prices for the year. This environment has significantly impacted traditional retail property investors. A recent survey reveals that a record 38% of “mum and dad” landlords plan to sell, driven out by rising council rates, higher running costs, and the fading prospect of steady capital gains.

The Ultra-Luxury Anomaly

While the mainstream market softens, the top-tier segment faces severe supply shortages. Recent updates to the Active Investor Plus visa regime allow qualifying foreign investors to purchase residential properties over $5 million, creating a surge in demand from the US and UK. Nationwide, there are only about 142 listings priced above $10 million, meaning developers and buyers are competing in a highly constrained niche.

Summary

For borrowers deciding whether to fix or float their mortgage, the data points toward fixing. With domestic inflation rising and the RBNZ widely expected to initiate multiple OCR hikes starting in July 2026, floating rates are exposed to immediate upward pressure. Locking in a fixed term now offers practical protection against the projected increases in wholesale funding costs over the next 12 to 18 months.