The Reserve Bank of New Zealand held the OCR at 2.25% yesterday and the tone out of Governor Breman’s statement was noticeably more hawkish than most borrowers were expecting. If you have a mortgage coming up for refixing in the next few months, this decision matters. Here’s what you need to know, plus a story from my time at BNZ that I think is worth keeping in mind.

What Actually Happened Today

The RBNZ Monetary Policy Committee voted to hold the OCR at 2.25%. But it was the language around the decision, not the number itself, that caught attention.

Since February’s Monetary Policy Statement, the Middle East conflict has materially shifted New Zealand’s inflation outlook. Reduced supply of oil, gas, and petrochemicals has pushed energy prices up sharply. The RBNZ now forecasts inflation at 3.0% in the March quarter and 4.2% in the June quarter — well above the 2% midpoint of their target band.

“The Committee stands ready to act decisively to ensure that inflation reaches the 2 percent mid-point of the target band in the medium term.” — RBNZ, April 2026

Translation: rate cuts are off the table. Rate hikes are back in the conversation. This is a significant shift from where things stood just eight weeks ago.

What Tony Alexander Is Saying

Economist Tony Alexander, one of New Zealand’s most widely-followed mortgage commentators, has been urging caution about rate optimism for several months, and today’s decision validates that view. His key points following the hold:

•  Two-year fixed rates have already moved up around 20 basis points in response to the inflation outlook.

•  The bottom of the rate cycle has likely been reached — don’t bank on rates falling further.

•  Fixing for one to two years still makes sense for most borrowers, with three years worth considering given upside inflation risk.

•  Banks’ margins remain below average, meaning small rate increases of around 0.2% in the near term are possible even without an OCR move.

A Word on Economist Predictions — From Someone Who Learned the Hard Way

I want to add something here that I think gets glossed over whenever we talk about economist forecasts. And I say this with respect — Tony Alexander is sharp, prolific, and genuinely one of the better commentators in this space.

But I remember vividly a time when I was working at BNZ. An internal article circulated from one of our economists — confident, well-reasoned, the kind of thing that makes you nod along. The recommendation, essentially: if you’re refixing your mortgage right now, go for 5.99% p.a. fixed for three years.

I followed that advice. Twelve months later, rates had dropped to 4.69%.

That’s not a small difference. On a $500,000 mortgage, the gap between 5.99% and 4.69% over three years is real money — tens of thousands of dollars in extra interest. And the economist wasn’t being reckless. They were applying the same frameworks, the same data, the same logic that underpins every forecast you’ll read today. They were just wrong.

I’m not sharing this to take cheap shots. I’m sharing it because it’s the most important thing I learned during my time in banking: no one can tell you with certainty where rates will be in 12, 24, or 36 months. The best forecasters will tell you that themselves.

What that means practically: your mortgage decision shouldn’t be built on a prediction. It should be built on your situation, your cashflow, your risk tolerance, your plans. A good adviser doesn’t just tell you what rates are doing. They help you structure your lending in a way that works whether rates go up, down, or sideways.

What This Means For You

If you’re a first home buyer

Rates are still significantly lower than the 2022-23 peaks. If you’re getting into the market this year, you’re not walking into the worst conditions — but don’t wait for rates to fall further. Today’s decision suggests that window has likely closed.

If you’re coming off a fixed rate soon

Don’t roll onto floating. With floating rates typically 1-2% above fixed, locking in a one or two year rate is the sensible move for most people. The window to refix at current levels may be shorter than it looks.

If you’re a property investor

Today’s decision is a prompt to review your loan structure. Rising inflation and the potential for rate increases make it worth getting a proper assessment of whether your current setup is still optimal — especially with interest deductibility rules having shifted in your favour.

The Bottom Line

The OCR hold at 2.25% sounds neutral but the hawkish tone signals that cheap money is behind us. Rates have already started edging up, global risks are elevated, and the RBNZ has made clear it won’t hesitate to move if inflation stays hot.

Take the expert commentary seriously. Just don’t bet your mortgage on any single forecast including mine. Talk to someone who’ll look at your actual numbers and help you make a decision that holds up regardless of what rates do next.

At Homelend, we give you straight advice based on your situation — not headlines. A free 15-minute chat could save you thousands. Book yours at homelend.co.nz

— Fei, Homelend

homelend.co.nz