The RBNZ Official Cash Rate (OCR)
The Official Cash Rate (OCR) is the benchmark interest rate set by the Reserve Bank of New Zealand (RBNZ) through its Monetary Policy Committee. The OCR is reviewed approximately seven times per year. When the RBNZ raises the OCR, borrowing costs rise and savings returns increase — this is used to cool inflation. When the OCR is cut, borrowing becomes cheaper and the economy is stimulated. The OCR directly influences all other interest rates in NZ, from mortgage rates and term deposits to credit card rates and business lending. In 2024–2025, the RBNZ cut the OCR significantly from its 5.50% peak, and in 2026 it sits in the 3.50–4.00% range as the bank seeks to balance inflation and economic growth.
NZ Interest Rates Overview 2026
| Rate TypeRate (approx. 2026)Set ByAffects |
OCR~3.50–4.00%RBNZAll NZ interest rates
90-day bank bill rate~3.60–4.10%Money marketShort-term bank funding
1-yr fixed mortgage~5.50–6.20%BanksHomeowners
2-yr fixed mortgage~5.30–6.00%BanksHomeowners
1-yr term deposit~4.80–5.20%BanksSavers
Credit card rate~13–28%+BanksCredit card holders
Personal loan rate~10–25%Banks/lendersBorrowers
Mortgage Rate Trends in NZ 2024–2026
NZ mortgage rates peaked in 2023 when the RBNZ's OCR reached 5.50% — the highest level in many years — as the bank fought to bring down post-COVID inflation. Since late 2024, the RBNZ has been in a cutting cycle, progressively lowering the OCR. Mortgage rates followed downward, providing relief to homeowners coming off fixed terms. In 2026, 1-year fixed mortgage rates are broadly in the 5.5–6.5% range depending on the lender and the borrower's loan-to-value ratio. The floating rate typically sits 1–2% above the 1-year fixed rate and is used by borrowers who want flexibility rather than certainty.
How NZ Mortgage Rates Are Set
NZ mortgage rates are influenced by the OCR but are not directly tied to it. Banks fund mortgages using a mix of retail deposits, overseas wholesale borrowing, and New Zealand debt capital markets. Wholesale funding costs depend on global interest rate markets (particularly the US Federal Reserve's rate decisions) as well as the RBNZ's OCR. When overseas funding costs rise, NZ mortgage rates can rise even if the OCR is flat or falling. This is why mortgage rate movements don't always exactly mirror OCR changes.
NZ Savings and Term Deposit Rates 2026
The flip side of higher borrowing costs is higher savings returns. In 2026, NZ term deposit rates for 1-year terms are in the 4.80–5.20% range from major banks, with smaller banks and non-bank deposit takers offering slightly higher. This is considerably better than the near-zero rates available in 2021–2022. Savers who were patient have been rewarded. For those deciding between a savings account and a term deposit, term deposits typically offer 0.50–1.00% more than instant-access savings accounts for comparable periods.
Impact of Interest Rates on House Prices in NZ
Interest rates and NZ house prices have a well-documented inverse relationship. When rates are low, borrowing is cheap, demand for housing rises, and prices increase. When rates are high, mortgage repayments become expensive, buyer demand falls, and prices come under pressure. The 2022–2023 rate rises contributed to a significant correction in NZ house prices from their pandemic peaks. As rates ease in 2026, house price activity has picked up, though affordability remains stretched in Auckland and Wellington compared to historic norms.
What Should You Do With Your Mortgage in 2026?
The decision to fix your mortgage, and for how long, depends on your view of future rate movements and your personal circumstances. In a falling rate environment, shorter fixed terms allow you to refix at potentially lower rates sooner. Longer fixed terms provide certainty and protection if rates reverse upward. Most mortgage advisers recommend a split strategy — fixing portions of your mortgage at different terms to balance certainty and flexibility. Always factor in break fee costs if there's any chance you might need to sell or refinance before your fixed term ends.
Frequently asked questions
What is the current OCR in New Zealand?
The RBNZ's Official Cash Rate in 2026 is approximately 3.50–4.00% following a series of cuts from the 5.50% peak reached in 2023. The RBNZ reviews the OCR approximately seven times per year and publishes its decisions with a Monetary Policy Statement explaining the reasoning. The current and historical OCR is available at rbnz.govt.nz. The OCR directly influences all NZ interest rates — mortgage rates, savings rates, and business lending rates all move broadly in response to OCR changes, though with different lags and magnitudes.
Why are NZ mortgage rates higher than the OCR?
NZ mortgage rates are always higher than the OCR because banks need to cover their cost of funds (which includes overseas borrowing costs, deposit funding, and operating costs) and earn a margin. The spread between the OCR and 1-year fixed mortgage rates is typically 1.5–2.5%. When overseas funding costs (driven by US Federal Reserve policy and global credit conditions) are elevated, the spread can widen even if the RBNZ OCR is falling. Banks also factor in credit risk, competition, and their own balance sheet needs when setting retail mortgage rates.
Are NZ interest rates going to fall further in 2026?
As of 2026, the RBNZ has been in a rate-cutting cycle since late 2024. The direction of further cuts depends on inflation staying within the 1–3% target band, economic growth, and the labour market. Market economists and the RBNZ's own forecasts (in the Monetary Policy Statement) provide the best guidance on where rates are headed. For mortgage borrowers, the key question is how quickly and how far rates will fall, and whether to lock in current rates or wait. This is fundamentally uncertain — no one knows for sure. A balanced approach (splitting across 1-year and 2-year fixed terms) reduces the risk of being badly wrong in either direction.
What does the RBNZ OCR cut mean for my mortgage?
When the RBNZ cuts the OCR, banks typically lower their fixed and floating mortgage rates within days to weeks. For floating rate borrowers, the benefit comes through immediately on the next repayment date. For fixed rate borrowers, the lower rates only apply when your fixed term matures and you refix. If your mortgage is fixed at 6.50% for another 18 months, an OCR cut today won't help your repayments until you can refix. This is why many borrowers coming off high fixed rates in 2025–2026 have found significant relief in the lower rate environment.
How do NZ interest rates compare to Australia?
NZ and Australian interest rates generally move in similar directions, both influenced by inflation and monetary policy objectives. The Reserve Bank of Australia (RBA) sets the Australian cash rate, which has broadly tracked the RBNZ's OCR with some lag differences. In 2026, the RBNZ has been somewhat faster to cut rates than the RBA in this cycle. NZ mortgage rates are broadly comparable to Australian rates, though direct comparison is complex due to differences in the mortgage market structure (fixed vs variable rate prevalence differs significantly between the two countries).
What is the neutral interest rate in NZ?
The RBNZ estimates New Zealand's neutral OCR (the rate that neither stimulates nor restricts the economy) at approximately 2.75–3.25%. When the OCR is above this level, monetary policy is restrictive (slowing inflation). Below it, monetary policy is stimulative. In 2026, with the OCR around 3.50–4.00%, policy is still mildly restrictive by the RBNZ's own estimate, meaning further cuts are possible if inflation continues to moderate and economic growth remains subdued. The neutral rate estimate changes over time based on structural economic factors.
How do I get the best interest rate on a home loan in NZ?
To get the best home loan rate in NZ: (1) compare rates across all main lenders using interest.co.nz; (2) use a mortgage broker who has access to wholesale or negotiated rates not available to retail customers; (3) have a strong application (20%+ equity, stable employment, clean credit history) to qualify for the best rates; (4) don't just take the first offer from your existing bank; (5) consider the full offer including cash back, break fee structure, and offset facility, not just the headline rate; (6) negotiate — banks consistently offer rates below their advertised carded rates for strong borrowers.
