NZ interest rate predictions: what the banks expect for 2026–2028

16 Oct 2026

Every interest rate prediction NZ banks have published points the same way: the OCR is 2.75% and the next move is more likely up than down. Most economists expect a hold on 28 October, then another rise or two over the next year, with the OCR peaking somewhere between 3% and 3.75%. Nobody I’ve read is calling cuts soon, so waiting for fixed rates to fall isn’t a plan I’d lean on.

Written and reviewed by Yatin Kainth

Financial Adviser, FSP1007497 · Mortgage Sense

Last reviewed 15 October 2026

Bank views are from early September 2026, after the RBNZ lifted the OCR to 2.75%. Forecasts get revised often, so treat every number here as a guess. I’ll update this page after the 28 October decision.

Clients ask me the same thing every week: “Where are rates going?” Honest answer: the banks don’t agree, and they’ve all changed their minds since July. Here’s what they’re saying and what I’d do with it.

The OCR

The RBNZ track behind NZ interest rate predictions

The Reserve Bank raised the OCR 25 basis points to 2.75% on 2 September, its second lift since July. June-quarter inflation was 4.1%, driven by fuel. The Committee said the OCR “may need to increase further” but that the path isn’t pre-determined.

The RBNZ’s September track has the OCR at 2.6% in 2027, 3.1% in 2028 and 3.2% in 2029. Those look like annual averages, so the 2027 figure sitting under today’s 2.75% isn’t a forecast of cuts so much as a sign the Bank expects inflation to ease. The next decisions are Wednesday 28 October and Wednesday 9 December, both at 2pm. I’ve listed them in OCR announcement dates.

The banks

What each bank economist expects: the NZ interest rate forecast for the next 5 years

Bank	View (early Sept 2026)
ANZ	Still expected an October hike. OCR probably ends above 3%.
ASB	25bp hikes in October and December. OCR 3.25% by year-end, then held through 2027.
BNZ	Dropped its October hike call. Another rise likely, timing unclear.
Westpac	Pause in October, hike in December. Earlier 4% peak cut to about 3%.
Kiwibank	A pause at 2.75% “sounds sensible”. Earlier hoped to stay at or below 3% until 2028.

Peaks range from 3% to 3.75%, and that spread is the point. A hold on 28 October is now the most common call, but October versus December is still open. The September-quarter inflation figure is due on 22 October, and the election is on 7 November. Either could shift these views.

Your refix date matters more than any forecast. I’ll show you the options for your loan before the next OCR decision.

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Fixed terms

What these interest rate predictions mean for your fixed term

Advertised rates in mid-October sit roughly here, and lenders change them daily: 1 year from about 4.95–5.0%, 2 years from about 5.3–5.4%, 3 years about 5.4–5.6%, 5 years about 5.5–5.9%. Floating is around 6.25–6.4%. Short rates are up since June, when the lowest 1-year was 4.65%.

The curve is fairly flat. You’re not paid much extra to fix longer, and you’re not saved much by fixing short. So I don’t try to call the OCR. I ask three things:

How much would a 1% rise hurt your budget? If it would hurt, lean towards certainty.
When do your fixed terms end? Spread them so you never refix everything at once.
Do you want to make extra repayments? Keep a floating or offset portion for that.

For most people that ends up as a split across two terms. Fixed or floating goes through the trade-offs, and refixing before the OCR decision covers the timing question. Use the rate comparison guide to check what you’re actually being offered.

Swap rates

NZ swap rates: why fixed mortgage rates move before the OCR does

Swap rates are the wholesale interest rates banks pay to lock in their funding cost for a set period, such as one, two or five years. When a bank offers you a fixed mortgage, it prices that loan off the matching swap rate and adds its margin. So NZ swap rates are the closest thing to a preview of where fixed mortgage rates are heading.

Swap rates move on what traders expect the OCR and inflation to do over the term, not on today’s OCR. That’s why fixed rates can rise before the Reserve Bank lifts the OCR, and why they can ease before it cuts. If the market starts pricing in more OCR rises, swap rates lift and banks follow with higher fixed rates, usually within days. Floating rates track the OCR itself more closely. Our next OCR announcement dates page shows when the OCR can actually change.

Are mortgage rates dropping? When could home loan rates drop?

With the OCR at 2.75% and most economists expecting a hold on 28 October and more rises over the next year, mortgage rates to drop soon isn’t the central view. Fixed rates could still ease if inflation falls faster than expected, because swap rates would move first. If the next interest rate news is that inflation is cooling, watch for fixed rates to move before the OCR does. I wouldn’t plan around it.

House prices

A line on house price forecasts

For 2026, the forecasts I’ve seen run from ANZ at -2% and Westpac at -1% to ASB and BNZ at flat. For 2027, BNZ is at +3% and ANZ expects only a modest rise. The RBNZ expects a modest recovery, weakest in Auckland and Wellington. I couldn’t find a published 2028 house price forecast from the banks, so I won’t pretend to have one.

Questions

Common questions

When will interest rates go down in NZ?

Nobody knows yet. The OCR is 2.75% after the September lift, and the bank economists I’ve read expect a hold or more rises first. The RBNZ’s own track has the OCR back near 2.6% on average in 2027, but that depends on inflation coming down.

What are swap rates and how do they affect my mortgage?

Swap rates are the wholesale rates banks use to price fixed-rate lending. When swap rates rise, fixed mortgage rates usually follow within days, and when they fall, fixed rates tend to ease. They move on market expectations for the OCR and inflation, which is why fixed rates often change before an OCR decision.

Are mortgage rates going to drop in NZ?

Not on the current consensus. Most economists expect a hold on 28 October and more OCR rises over the next year. Fixed rates could ease earlier if inflation falls faster than expected, but I wouldn’t plan around that.

Are the bank interest rate predictions reliable?

They’re a guide, not a promise. Banks revise their forecasts after every inflation reading and every RBNZ decision, and several have changed their view since July. I use them to understand the risk, not to pick a rate.

Should I fix for a longer term if rates are rising?

Not automatically. Longer fixed rates are already higher than short ones. Many people split the loan across two terms so they’re not refixing everything at once.

Will house prices rise or fall?

The bank forecasts I’ve seen range from small falls to flat prices for 2026, and a modest rise in 2027. None expects a sharp rebound while rates are going up.

Refixing before the OCR

How to pick a 1, 2 or 3 year term right now.

Fixed or floating

When each one makes sense, and how to split.

Comparing home loan rates

What to look at beyond the headline rate.

Talk it through with Yatin. Free, no obligation, and usually one phone call.

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This article is general information only and isn’t personalised financial advice. Figures are illustrative and based on the assumptions shown. Mortgage Sense is a trading name of Yatin Kainth, a Financial Adviser (FSP1007497) providing advice under the Mortgage Managers licence (North West Group Holdings Ltd, FSP682791). See the Disclosure Statement.

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