Property Investment
2 min read
Here is your monthly interest rate report.
This gives you a quick, plain English update on how much your mortgage costs.
After falling throughout 2024 and 2025, interest rates have started creeping up (again).
It's mainly the longer-term rates that are moving. The 18-month to 5-year rates have all increased this month.
The average 5-year rate is now 5.58% up from 5.37% last month. That's a jump of 0.21%.
Meanwhile, the shorter-term rates (6 months to 1 year) have stayed flat or even dropped slightly.
Those "secret" discounts (where the bank advertises one rate but gives you a lower one) have essentially vanished.
The only exception? Floating rates, where banks are still discounting by around 0.37%.
On fixed rates, what you see is pretty much what you get.
Markets are getting nervous that the OCR might rise sooner than they previously thought.
Why? After coming down … inflation has started creeping up.
The latest CPI figure came in at 3.1% for the December quarter. That's above the Reserve Bank's 1–3% target band, mainly driven by imported inflation from overseas.
The question is: How will the Reserve Bank respond?
If they're hawkish (laser-focused on getting inflation down), your mortgage could get more expensive.
If they're dovish (less concerned, expecting inflation to sort itself out), interest rates may settle.
Next Wednesday, the Reserve Bank will release its OCR decision and Monetary Policy Statement.
Most commentators expect the OCR to stay flat at 2.25%.
But the real focus will be on the tone. What are they seeing? What are their forecasts saying?
This will be Dr Anna Breman's first Monetary Policy Statement as Reserve Bank Governor. She's already tried to calm the market (late last year) by doing a round of media interviews.
But now it’s her time to shine and set the direction for where interest rates could go.
Markets will be watching closely. If she signals rates could stay flat for longer, the recent rises in longer-term mortgage rates may ease off.
If she confirms that inflation continues to be a big concern ... expect rates to keep climbing.
You might notice shorter-term rates are now lower than longer-term rates. That's actually how things usually are.
Over the past few years, longer-term rates were sometimes cheaper than short-term rates.
That happened because the OCR shot up. But most people expected it would eventually come down.
Now we're returning to normal: the 1-year rate is lower than the 18-month, which is lower than the 2-year, and so on. That’s a sign that the markets are heading back to normal.
We’re not expecting to see the OCR shoot up and down as we’ve seen over the last few years.
I'll be back next month to tell you how the Reserve Bank's announcement landed and where rates could go next.
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.
This article is for your general information. It’s not financial advice. See here for details about our Financial Advice Provider Disclosure. So Opes isn’t telling you what to do with your own money.
We’ve made every effort to make sure the information is accurate. But we occasionally get the odd fact wrong. Make sure you do your own research or talk to a financial adviser before making any investment decisions.
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