Mortgages
How interest rates are changing right now - May 2025
Interest rates have dropped over the last month. Here’s what changed and how it’s affecting mortgage affordability.
Mortgages
2 min read
Here is your monthly interest rate report.
This gives you a quick, plain English update on how much your mortgage costs.
TL;DR
- Some interest rates are down. One is up
- Banks are sticking to their guns. Not much discounting going on.
- Borrowers still prefer a 1-year fix, but the 2-year is gaining.
Some interest rates are down … some are up (just)
The Reserve Bank cut the OCR again 3 weeks ago.
I didn’t expect the banks to cut much … and that’s what we got.
The average 1-year rate is down 0.09% since last month. It’s not much, but I’ll take it.
The 6-month and 3-year rates got the biggest drops. They went down 0.17% and 0.14%, respectively.
Westpac led the 3-year rate cuts, dropping that rate from 5.19% to 4.95%.
They’re currently the only bank offering a 3-year rate with a 4 in front of it.
Though, the average bank increased the 5-year rate by 0.02%. So keep in mind that interest rates don’t go one way.
This tells me that the longer-term interest rates are at their floor and have been for a while. Don’t expect large drops to the 4 and 5-year rates.
Still little room for negotiation and back-room discounts
The banks usually discount their rate when you take out a mortgage.
So they might advertise 5.5% for the 6-month rate.
But when you borrow the money, they might offer you 5.3%.
It’s hard to see these discounts as a borrower. So, I like to share what we’re seeing at Opes Mortgages.
There is still very little room for negotiation. The average bank advertises 4.95% for the 1-year rate.
Behind the scenes, they only discount this to 4.90% once you negotiate.
A piddly 0.05% discount.
The 6-month rate still has the biggest discount.
The average bank advertises 5.39% for the 6-month. Behind the scenes, they’re discounting this to 5.27%. A 0.13% discount.
What are the lowest interest rates in the market?
The lowest rate in the market is now 4.85%. That’s for the 18-month, which remains the lowest rate. It has been for a while.
Behind the scenes (after you negotiate), all 4 big banks are hovering at 4.85% - 4.89% for that 18-month rate.
How long do I fix for?
Interest rates have fallen a lot. And the future feels uncertain.
Most mortgage advisers say their clients prefer fixing for just 1-year.
But a large number also say their clients prefer the 2-year.
If I showed you this same graph a year ago … it was clear. Over 80% of mortgage advisers preferred the 1-year rate.
Now, it’s a more even spread.
Though, still not many people going for the 3 – 5-year rates.
Need help with your mortgage?
Got a question about your mortgage?
Hit reply and let me know your situation. I’ll come right back to you to see if my team can help.
Cheers,
Pete
Peter Norris
Mortgage broker for over 10 years, property investor and Managing Director at Opes Mortgages
Peter Norris, a certified mortgage adviser with 10+ years of experience, serves as the Managing Director at Opes Mortgages. Having facilitated over $1.2 billion in lending for 2000+ clients, Peter is a respected authority in property financing. He's a frequent writer for Informed Investor Magazine and Property Investor Magazine, while also being recognized as BNZ Mortgage Adviser of the Year in 2018 and listed among NZ Adviser's top advisers in 2022, showcasing his expertise.
