One-year fixed mortgage rates sit between 4.65% and 4.79% as banks face rising wholesale funding costs, with markets pricing in further OCR increases through 2026.
The gap between New Zealand's floating and fixed mortgage rates has narrowed — and attention is now firmly on what happens next to fixed rates.
Following the Reserve Bank of New Zealand's July 2026 OCR review, which lifted the official cash rate by 25 basis points, banks moved quickly to pass increases on to floating borrowers. Westpac was first to act, raising its floating home loan rate, with Kiwibank, BNZ, ASB and ANZ following. That chapter appears largely settled.
Now the focus has shifted to the fixed rate shelf — and the pressures building there are harder to ignore.
Where fixed rates stand right now
The one-year fixed home loan rate currently ranges from 4.65% at ANZ and ASB to 4.79% at BNZ, Kiwibank and Westpac, according to interest.co.nz. That positioning is noteworthy because it sits below the level these same banks were charging in April 2025 — when the one-year fixed rate hit 4.99% across the major providers.
The implication is that rates have not yet fully caught up with where wholesale funding costs sit today.
What's driving the pressure
Swap rates — the instruments banks use to lock in their funding costs for fixed-rate loans — have been climbing. The article notes that market pricing following the July RBNZ decision has since moved to factor in two full 25-basis-point OCR increases over the remainder of 2026, with a roughly one-in-three probability of a third.
Banks source a significant portion of their mortgage funding from wholesale markets. When those markets price in further OCR rises, the cost of that funding rises in parallel. For a bank writing a one-year fixed mortgage today, the relevant hedging cost is the one-year swap rate — and that has moved materially higher.
Shorter-dated bond yields have also been rising. The article points to the benchmark US Treasury yield as a driver, noting that ugly US budget management has done little to ease upward rate pressure globally. Geopolitical uncertainty and the risk of further global inflation have compounded the effect.
What this means for borrowers and savers
The article frames the situation without recommending action. For borrowers currently on a fixed rate, the question of whether to fix again — or roll into a floating product — is a timing decision that depends heavily on individual circumstances. Fixed rates at 4.65–4.79% remain historically low by longer-term standards, but higher than the post-pandemic floor, according to interest.co.nz.
For savers, the picture is more mixed. Term deposit rates currently sit at 3.45% for six months, 3.60% for nine months and 3.90% for twelve months. The article notes that when banks raise lending rates, they do not always pass the equivalent increase through to deposit rates — a dynamic that has been a persistent feature of the NZ banking market. Shopping around for a better deposit rate remains one mechanism available to savers who want to apply competitive pressure.
Why the fixed-versus-floating question keeps surfacing
The gap between floating and shorter-term fixed rates has compressed significantly over the past 18 months. Floating rates have absorbed OCR increases relatively quickly, while fixed rates — which reflect where banks expect funding costs to settle over one or two years — have at times lagged behind.
This creates a recurring pattern: floating rates rise first and fast, narrowing the premium that once made fixing for certainty attractive. Borrowers who fixed 12 or 18 months ago at lower rates are now rolling into a materially different rate environment, and the question of whether to fix again or take their chances with floating is one that comes up in every rate cycle.
The article does not forecast which way banks will move next. The pressure points it identifies — wholesale costs, swap rates, international rate direction — are the same ones analysts track throughout the year.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.