Property data firm Cotality says New Zealand mortgage holders are at a turning point, with shorter-term fixed rates no longer delivering the savings they once did as market rates push higher ahead of any OCR moves.
New Zealand mortgage holders are facing a turning point as the strategy of staying on short-term fixed rates stops delivering the savings it once did. Property data firm Cotality says market mortgage rates have risen regardless of where the official cash rate ends up — and borrowers are already beginning to feel the shift.
Chief property economist Kelvin Davidson said borrowers who fixed for six months in October at around 4.8 percent would now face roughly 5.1 percent on a two-year term — about 30 basis points higher. "People have got used to rolling off those previous fixed loans and seeing those rates fall," he said. "But just at the moment, it seems to be a turning point."
Why the strategy is running out of steam
For the past two years, many borrowers were rewarded for staying on short-term fixed rates and repeatedly repricing downward as the OCR fell. That pattern has broken. Although the Reserve Bank is not expected to raise the OCR at its May 27 meeting, wholesale funding costs have moved higher, pushing up retail mortgage rates without any change in the cash rate. Markets have also brought forward their expectations of when OCR increases will arrive.
The data shows this playing out in lending behaviour. Floating and short-term fixed lending has become less popular over the past six months, while the two-year fixed rate has become the single most common lending term — accounting for 29 percent of new lending in March 2026. "Borrowers are increasingly prioritising repayment certainty again as refinancing conditions become more uncertain," Davidson said.
What this means for those rolling off existing loans
For homeowners who have been rolling off relatively short-term fixed rates and seeing those rates fall with each reset, the next refinancing decision looks different. The choice is no longer between a falling rate and a stable one — it is between two rates that are both higher than what they were six or twelve months ago, and rising.
The shift matters because the cost of inaction has changed. Previously, rolling off a two-year rate into a six-month rate typically meant locking in a lower rate. Now, shorter-term rates are rising faster than longer-term ones, which means the calculus for choosing between a one-year, two-year, or longer-term fix has shifted. Davidson noted that as rates progressively increase, more people will find themselves in a position where their refinancing rate is higher than what they had been paying.
Cotality's analysis was published on 27 May 2026, coinciding with the Reserve Bank's monetary policy statement on the same day.
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.