OCR and Interest Rates - What They Mean for Canterbury Property in 2026

From August 2024 to November 2025, the Reserve Bank of New Zealand cut the Official Cash Rate nine times, taking it from 5.5% to 2.25%. At its February 2026 meeting, the RBNZ held at 2.25%, signalling the cutting cycle is over and the next move will likely be upward.

What the RBNZ Said

The February 2026 Monetary Policy Statement struck a neutral tone. The Reserve Bank noted that inflation, which briefly pushed to 3.1% in late 2025, was expected to be back within the 1-3% target band by March 2026 and to settle near the 2% midpoint over the following 12 months. Economic activity is picking up, supported by lower interest rates and strong export commodity prices.

Where Mortgage Rates Are Now

The average yield on mortgages across New Zealand fell to approximately 5.4% following the OCR cuts. The RBNZ projected this would fall further to around 4.7% by September 2026 as approximately 40% of fixed rate mortgages reprice over the December 2025 and March 2026 quarters. In practice, 1-year fixed rates from major banks were available around 4.59% on specials in early 2026.

What the Major Banks Are Forecasting

ANZ believes the OCR will remain at 2.25% throughout 2026 but forecasts all fixed mortgage rates rising to around 5%, with the 1-year rate reaching 5.2% by December 2026. ASB expects most fixed rates to remain sub-5% for a significant portion of 2026. BNZ says mortgage rates will start moving upward from mid-2026. Westpac has the most aggressive forecast - the OCR rising to 2.5% in December 2026 and potentially reaching 4.0% by end-2027. The RBNZ's own track implies roughly a 50/50 chance of a single 0.25% increase by December 2026.

What This Means for Canterbury Property

The era of falling mortgage rates is over. For most analysts, a single 0.25% increase in late 2026 or early 2027 is the central scenario. For Canterbury buyers refixing now, spreading across terms - for example splitting between 1-year and 2-year rates - captures today's lower short-term rates while providing some protection against faster-than-expected rises. Canterbury's relative affordability and population growth give it a cushion that more expensive cities lack if rates move higher.

Data from RBNZ OCR decision (February 2026), Opes Partners interest rate predictions, Canstar NZ, and Squirrel. For general information only - not financial or mortgage advice.