Ceasefire Unlikely to Lower Mortgage Rates

Despite a ceasefire in Iran, New Zealand mortgage rates are expected to rise toward 6% as the Reserve Bank eyes potential OCR hikes to combat inflation.

By: AXL Media

Published: Apr 10, 2026, 6:15 AM EDT

Source: RNZ Pacific

RBNZ Policy and Economist Projections

The Reserve Bank held the Official Cash Rate (OCR) at 2.25% this week but signaled it is prepared to act if medium-term inflation expectations shift. Major bank economists are now adjusting their forecasts:

Westpac: Chief economist Kelly Eckhold expects the first OCR increase to occur in September 2026 (moved up from December). He predicts mortgage rates will climb from the mid-4% range into the 5.5% to 6% range by year's end.

Infometrics: Chief forecaster Gareth Kiernan suggests that the recent moderation in swap rates has merely removed "upward pressure" rather than creating space for rates to fall.

Market Volatility and "Yield Curve" Swings

Squirrel CEO David Cunningham noted that New Zealand's interest rate market is swinging more "violently" than global counterparts. The current yield curve is already predicting interest rates of 3.5% by June 2027, which is being reflected in higher fixed rates today. Currently, three-year fixed rates are sitting well above 5%.