Fixed rates hold steady as buyers stay cautious but not deterred
Economists and agents weigh in on the RBNZ's OCR hike, with fixed mortgage rates steady but buyer caution deepening across NZ's housing market. While the Reserve Bank's move to lift the OCR to 2.75% was covered as it happened, the more useful signal for advisers lies in what economists and agents are now saying about where rates and the housing market head next.
In a OneRoof report, independent economist Tony Alexander noted that because the hike had already been priced into fixed wholesale borrowing costs, "there is little immediate pressure for fixed mortgage rates to be adjusted," with some fixed costs even easing marginally on a slightly less hawkish RBNZ tone than July. That said, Alexander expects "further increases in fixed borrowing costs" through 2026 and into 2027, particularly if business margin rebuilding and looming council rates rises add fresh inflation pressure.
Westpac chief economist Kelly Eckhold described the RBNZ's September statement as "appropriately balanced," with the bank's own forecast pencilling in a hold in October and a further hike in December rather than back-to-back moves.
ASB senior economist Mark Smith went further, describing the RBNZ's approach as "policy normalisation in a gradual manner (i.e. slowly taking the foot off the policy accelerator) rather than pressing on the monetary policy brakes."
ASB expects follow-up 25-basis-point hikes in both October and December, taking the OCR to 3.25% by year's end — a further 25 basis points beyond Westpac's more measured path, and a useful reminder to brokers that bank forecasts on this cycle are far from unanimous.
Both banks' assessments track the RBNZ's own language that the recovery "has most likely resumed but remains uneven," and match the broader theme in Kiwibank's commentary, which separately flagged "the unevenness of the recovery" as a key driver of the decision. Kiwibank's economists went further, calling it a "dovish hike" that keeps rates "in stimulatory territory for a little bit longer," adding that "the weak Kiwi economy is doing a lot of the heavy lifting" to keep inflation contained.
Buyer sentiment: cautious, not stalled
On the ground, LJ Hooker's data suggests the market was already slowing before this decision landed.
Head of research Mathew Tiller said Cotality recorded 6,935 property sales in July, down 6.4% on a year earlier — the seventh consecutive annual fall — while values slipped 1% over the three months to July.
"Buyers are active, but they are also selective. They are comparing more properties, carrying out more due diligence and focusing heavily on value before making an offer," Tiller said, adding that the OCR rise is "likely to reinforce that behaviour rather than stop the market."
ASB's own read on the housing backdrop adds useful colour here: Smith noted the bank has "been pondering as to why the NZ house price and household spending backdrop has not been as strong as it should be at this stage of the cycle," flagging that ASB will publish dedicated research on the puzzle in the coming week — a signal that even bank economists see the current softness as somewhat abnormal rather than fully explained by rates alone.
Alexander's own agent survey backs this up: just 6% of agents report FOMO among buyers, far below the 92% peak recorded in late 2020, while a high proportion flagged "FOOP" — fear of overpaying — as a genuine deterrent. His survey also points to a net 49% of agents seeing falling investor numbers, which he attributes to election uncertainty and low expectations for capital gains.
First-home buyers, by contrast, remain resilient, accounting for a record 29.0% of July purchases per LJ Hooker, with head of network Allaine Burkett noting they're "taking advantage of increased choice and the ability to negotiate, provided they stay disciplined about what they can comfortably afford."
Upsize buyers find a window as fixed-rate relief holds
For advisers, the takeaway is nuanced rather than alarming. Fixed-rate borrowers have some breathing room for now, but clients coming off fixed terms should be encouraged to reassess their repayments and borrowing capacity early, particularly given the range of bank forecasts on the table — anywhere from Westpac's single further hike to ASB's expectation of two more moves taking the OCR to 3.25% by December.
Meanwhile, upsize buyers may be the best-placed group in the current market: Burkett noted the price gap between an existing home and the next purchase "may be more favourable than it was at the height of the market" — a genuine opportunity window for clients looking to move up, even as broader mortgage rates and affordability concerns keep overall market momentum modest.
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