Last updated: 22 September 2026
In its September Monetary Policy Statement, the Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) by 25 basis points, from 2.50 percent to 2.75 percent.
The September hike was widely expected with all five major bank economists and the Reserve Bank's Monetary Policy Committee largely aligned on a 25-basis-point move to 2.75 percent. The Committee reached its decision by consensus, judging that gradually removing monetary stimulus was appropriate to keep inflation returning sustainably to its 2 percent target while supporting growth and employment.
According to the RBNZ, inflation remains the key driver of the rate hike. Annual CPI hit 4.1 percent in the June quarter, above the Reserve Bank's own forecast, while unemployment has risen to 5.6 percent and wage growth stays subdued. The RBNZ, economists and market commentators were all largely in agreement that the OCR should keep climbing towards 3 to 3.25 percent over the next year.
The RBNZ expects inflation to stay elevated in the near term before easing back into its target band by mid-2027, with the economic recovery gradually strengthening and broadening as spare capacity is absorbed. The Committee noted the OCR may need to rise further from here, though it stressed the path ahead isn't pre-set and will depend on the data.
September’s increase doesn't change our fundamental advice, but it confirms the tightening cycle is underway, sharpening the case for acting sooner rather than later. The average rate on outstanding mortgages is expected to keep rising over the next 12 months as borrowers refix, regardless of what the OCR does from here.
Much of the RBNZ’s September rates rise was already reflected in fixed mortgage rates before the Reserve Bank made it official. Wholesale swap rates have climbed steadily since July, with the main banks having already lifted their fixed home loan rates in response, each pointing to swap market movements rather than the OCR decision itself as the reason for their changes. In other words, much of the repricing borrowers have been planning for has already started.
Looking ahead, the RBNZ’s Monetary Policy Report states that it “projects the OCR will increase gradually over the next two years to about 3.2 percent.”
Given this outlook, we currently favour the two-year fixed rate, as it offers the best combination of certainty and value for most borrowers, but the three-year rate is only marginally more and could be an option for those wanting more certainty. There is still some merit in the 18-month rate, though this carries some risk of being a slightly short-fixed term. It is also worth considering splitting your lending across these terms to balance out rate, flexibility and certainty.
In general, we are not recommending short-term fixes of six to twelve months for most borrowers right now. While those headline rates look attractive in isolation, the risk is rolling off a short fix and into a materially higher rate environment in the months ahead or into 2027.
If your fixed rate is due to expire in the next six to twelve months, it is worth reviewing your situation sooner rather than later. For some borrowers it will make financial sense to review their position now and consider locking in ahead of time rather than waiting until their current term expires. Whether that stacks up depends on your individual break cost, remaining term, and lender, so it is worth running the numbers with your adviser before making any call.
For reference, the latest negotiated rates* our advisers are seeing include:
* Please note these figures represent negotiated rates our advisers have secured on behalf of clients and may differ from advertised rates.
September’s OCR increase confirms the direction of travel for interest rates is still upward. The open question now is pace and peak, not direction. Borrowers who plan ahead, and structure their lending sensibly, will be better placed than those who wait and react.
If you have a mortgage coming up for refix, or you simply want to make sure your current structure still makes sense given where things are heading, now is the time to have that conversation.
If you would like personalised advice on your next step, click here to book a complimentary review with your adviser.
The content of this article should not be taken as financial advice, or a recommendation of any financial product. These insights are based on current economic commentary, market pricing for interest rates, and our personal opinion. Threefold is not liable or responsible for any information, omissions, or errors present.
