OCR Holds at 2.25% and What It Means for Your Mortgage in 2026

The Reserve Bank of New Zealand has kept the Official Cash Rate (OCR) at 2.25% — the third consecutive hold after a series of cuts brought it down from 5.50% in late 2024.
For homeowners and first home buyers, the question isn’t just where the OCR sits today. It’s where mortgage rates are heading over the next 12 to 18 months — and what you should be doing about it right now.
Here’s what the May 2026 OCR decision means for you.
Where Mortgage Rates Sit Today
As of late May 2026, the main bank rates look like this:

6-month fixed: from 4.49% (ANZ, ASB, BNZ, Kiwibank)
1-year fixed: from 4.65% (ASB, BNZ)
2-year fixed: from 5.19% (BNZ, Westpac)
3-year fixed: from 5.39% (BNZ)
5-year fixed: from 5.79% (BNZ, Westpac)

Short-term rates are sitting at their lowest point in this cycle. But several banks — including ANZ, ASB, and Westpac — have already started nudging rates back up in May. That’s an important signal.
Why the RBNZ Held — and Why It Matters
The Reserve Bank is walking a tightrope. On one side, the New Zealand economy is still sluggish and could use lower rates. On the other, the conflict in the Middle East has pushed oil prices sharply higher, feeding into inflation.
The RBNZ’s own forecasts show inflation hitting 4.2% in the June quarter — well above the 1-3% target band. That makes further rate cuts almost impossible right now, and it’s why most economists believe the OCR has reached its floor for this cycle.
In plain language: rates have probably stopped falling, and the next move is more likely to be up than down.
What Economists Are Saying About 2027
This is where it gets important for anyone thinking about fixing their mortgage. The major bank economists are split, but the direction is clear:
Westpac has the most aggressive view, forecasting six OCR hikes through 2027 — taking it all the way to 4.00% by the end of next year. That would push 1-year mortgage rates well above 5%.
ANZ expects the 1-year rate to reach 5.2% by December 2026 and 5.5% by September 2027.
BNZ is more conservative, expecting the OCR to stay on hold through 2026 with a first hike in early 2027.
Kiwibank still sees a small chance of one more cut to 2.00%, but even they acknowledge the balance of risks has shifted.
The takeaway: enjoy today’s rates, but don’t assume they’ll last.
What This Means If You’re Refixing Your Mortgage
If your fixed rate is coming up for renewal in the next few months, you’re in a window of opportunity. Current short-term rates are attractive, but the risk of rates climbing through 2027 is real.
A few things worth considering:
Splitting your loan across different fixed terms gives you a hedge — some portions locked in at today’s lower short-term rates, with others fixed longer to protect against rate rises. This is something we help clients with every day.
Income channelling is another strategy that works particularly well in this environment. By directing your salary through a revolving credit facility linked to your mortgage, you reduce the daily balance that interest is calculated on — without changing your spending habits. In a rising rate environment, this becomes even more valuable because every dollar of interest saved compounds.
Don’t just roll over whatever your bank offers at renewal. Different banks are pricing differently right now, and a quick comparison could save you thousands over the next few years.
What This Means If You’re a First Home Buyer
The current environment is actually favourable for first home buyers in several ways.
Auckland’s median house price peaked in late 2021 and has since corrected significantly. Prices are stabilising, but they’re still well below those peak levels — meaning better value for buyers entering the market now.
First home buyers are taking advantage. In early 2026, first home buyers accounted for a record 29% of all home purchases — and in Auckland that figure is even higher at around 30%. More than half of those purchases were made with less than 20% deposit.
If you’re eligible, the Kainga Ora First Home Loan lets you buy with just 5% deposit at standard bank rates — no low-equity premium. Combined with your KiwiSaver withdrawal (available after 3 years of membership), you may be closer to owning than you think.
With rates near their cycle lows and the possibility of increases ahead, locking in a mortgage now could mean securing a lower rate than what’s available in 12 months’ time.
The Bottom Line
The OCR at 2.25% gives New Zealand homeowners and buyers a moment of relative calm — but it’s not a moment to be complacent. Inflation pressures from the Middle East conflict are real, bank economists are increasingly forecasting rate rises through 2027, and several banks have already started lifting their mortgage rates.
Whether you’re looking to refix, restructure, buy your first home, or just understand your options — now is a good time to have that conversation.
We’re here to help. Our advice is free (the bank pays us, not you), and we work across all the major lenders to find the best structure for your situation.

Get in touch: fei@homelend.co.nz | 021 832 223 | homelend.co.nz