The story of 2025 has been one of falling interest rates. Its generally been a great year for the primary sector and rural economy. But the expected recovery for the wider economy, especially Auckland and Wellington, has not arrived.
And so we look ahead to 2026 and what it might hold. The consensus seems to be that the strength of the rural economy will eventually flow through to Auckland and Wellington. Or in other words the wider economic recovery has been delayed but not cancelled altogether.
The lower interest rates should encourage spending by consumers and investment by business. And flow through to employees feeling more secure in their jobs. Confidence should lead to more consistent economic growth. Eventually this will impact the housing markets in the main centres.
The banks are projecting house price growth of approx. 5% in 2026. The high volume of current listings for sale suggest that any price increases may be later in the year. And Auckland and Wellington house prices may continue to lag other parts of the country.
So what does this mean for interest rates? It means that the fall in rates has largely run its course. A further 0.25% cut in the OCR is expected on November 26th and perhaps one further cut early next year. But for most of 2026 the OCR is expected to remain largely unchanged. By mid 2026 the fixed rates are expected to begin rising in anticipation of some OCR increases in 2027. And so now is the time to fix for longer. Its important to note that the recovery is expected to be mild and its unlikely we'll see a return to the high rates of the last peak in the next few years.
And if you are thinking of switching banks then now would be a good time. A number of banks are offering potentially large upfront cash incentive payments, but there are some key conditions to be considered first.
My above comments are general, but please do not hesitate to get in touch to discuss your own situation in more detail. And if family or friends need advice on a new or existing mortgage, they are welcome to give me a call.
Best wishes and safe travel for the coming Christmas and New Year holidays.
