What does the OCR change mean for your mortgage?

17/04/2026 17/04/2026

Patrick Wang

What does the OCR change mean for your mortgage?

In the recent ANZ Research, the bank has an uptrend view of OCR. It now sees three consecutive 25bp hikes in July, September and October, taking the OCR to 3% in 2026.

1. What is the OCR?
The Reserve Bank is New Zealand's central bank for most registered banks in New Zealand. It is responsible for ensuring New Zealand has a sound and effective monetary and financial system including regulating the banks. These banks hold settlement accounts at the Reserve Bank which are used to settle the obligations between the banks at the end of the day. Due to the large volume of daily bank transactions, each bank can end the day in credit or debit. The Reserve Bank covers these ups and downs by either paying or charging interest to banks, depending on whether they are in credit or debit. Banks can borrow money from the Reserve Bank at a rate 0.25 percent higher than the OCR or they can lend money to it at a rate 0.25 percent lower than the OCR. The official Cash Rate then influences the cost of borrowing for banks, which affects the rates banks are able to offer to consumers.

2. How could the OCR affect your mortgage rate?
Generally speaking, a higher OCR means higher mortgage interest rates. With the OCR lift, mortgage borrower will usually have to pay higher interest to banks, as banks will pass on at least some of the OCR increase, if not all, to mortgage borrowers. If you’re on a floating rate, your interest payment may have been adjusted to the increase on the same day. For fixed-term loans, the next time you’re due to refix within the increase, you might have to choose a higher rate for the refix.

3. How long should you fix for?

Due to unexpected events and global economic recovery, some lenders/ economists predict that the OCR will go higher throughout the year 2026. The current rate is 2.25% in April 2026.
ANZ bank sees three consecutive 25bp hikes in July, September and October, taking the OCR to 3% in 2026. Gradual hikes are possible to continue in 2027. As a result of these predictions, fixing for longer terms may provide the best value right now. However, this decision-making will depend on your individual circumstances.
During the time of OCR rise, fixing for short term, e.g. six months to 1 year, is designed to be attractive as banks lower the short-term rates to produce instant gains for borrowers, and increase longer-term rates to a much higher level to create a big gap. This makes it hard to make a decision.
In consideration that although longer-term fix is more expensive, plus more hikes are to come, longer term options may bring long-term gains.
Banks may recommend that interest rate averaging to spread risk over several terms might be an alternative to think of: This will help reduce repayment volatility and spread your risk.
It’s recommended to seek financial advice from a mortgage broker or registered financial adviser before making any decisions.

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