Between November 2021 and May 2023, the Reserve Bank (RBNZ) lifted the Official Cash Rate (OCR) from its all-time low of 0.25% to 5.50% – a level not seen since before the GFC, in 2008.
As a result, these increases in the cost of borrowing flowed through to mortgage rates. In August 2021, the average one-year fixed rate for owner-occupiers on Canstar’s mortgage database was 2.58%. And by January 2024, it was 7.5%.
But, thankfully, peak mortgage pain has passed. Since last August, the RBNZ has cut the OCR five times, from 5.5% to 3.5%, and banks have reduced their mortgage rates.
At time of writing (15/04/25), the average one-year fixed rate on Canstar’s database is 5.31%, and over the past 12 months average fixed rates across one to three years have dropped around 170 basis points (bps).
But whereto from here?
When it made its most recent cut to the OCR, on April 9, the RBNZ noted that inflation, at 2.2%, was still in the middle of its target band of between between 1% and 3%, and that further reductions in the OCR could be appropriate, especially as the effects of the US’s tariff policies became clearer.
So given the RBNZ’s hint at further OCR cuts, what are the major banks predicating for the OCR and mortgage rates over the coming months? Let’s take a look.
Below are synopses of the major banks’ outlooks. Click on each bank’s name to jump to a more detailed overview of its predictions. And click here to see where, historically, mortgage rates have sat in relation to the OCR.
- ANZ: Expects more cuts to the OCR to take it to 2.5% by September, which could mean fixed rates of 1- and 2-years could fall further.
- ASB: The ASB has revised it OCR forecast, from an endpoint of 3.25% down to a low 2.75% by mid-August, and perhaps lower. But while shorter term home loan rates up to two years will move closer to 5%, longer term rates are unlikely to fall further, as they are already well below their 20-year averages.
- BNZ: Given the RBNZ’s indication that growth and inflation could fall below expectations, the BNZ is sticking with its forecast that the RBNZ will cut the OCR to a low of 2.75% by the end of the year. Short-term and variable mortgage rates to fall further, but longer-term rates to remain constant.
- Kiwibank: Thinks the OCR to reach 2.5% by the end of the year due to a weaker economy. As a result, wholesale and retail rates have further to fall.
- Westpac: OCR to bottom out at 3.25% in May. As a result, longer term rates now pretty much as low as they’re going to go. Short-term mortgage rates still have a little way to fall, but fixing shorter than a year is a bet that the OCR is going to go sub-3%, which Westpac says is unlikely.
Lowest Mortgage Rates for Refinancing
Looking to refinance your mortgage? The table below displays some of the one-year fixed-rate home loans on our database (some may have links to lenders’ websites) that are available for home owners looking to refinance. This table is sorted by current interest rates (lowest to highest), followed by company name (alphabetical). Products shown are principal and interest home loans available for a loan amount of $500K in Auckland. Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loan selector to view a wider range of home loan products. Canstar may earn a fee for referrals.
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ANZ
Due to the country’s stop-start economic recovery, the US’s trade policies and uncertainty around global growth, the ANZ has revised its OCR forecast down, and now predicts two more OCR cuts this year (in August and October) taking it to a low of 2.5%, where it will remain until the end of 2026, when it will move back up to a neutral level of 3%.
ANZ OCR Forecast April 2025
As for mortgage rates, in its March Property Focus, before its April OCR revision, the bank said that it “was not anticipating significant further falls
in fixed mortgage rates” because most of the RBNZ’s signalled OCR cuts had already been priced in by the market.
But given that the ANZ is now forecasting an OCR 50bps lower than it anticipated, perhaps its own rate predictions, like the OCR, have slightly further to fall.
ANZ Projected Special Interest Rates as of March 2025
| Interest Rates | June 2025 | September 2025 | December 2025 | March 2026 | June 2026 | September 2026 |
| Floating | 6.5% | 6.3% | 6.3% | 6.3% | 6.3% | 6.3% |
| 1-Year | 5.2% | 5.0% | 5.0% | 5.1% | 5.1% | 5.1% |
| 2-Year | 4.9% | 5.0% | 5.1% | 5.1% | 5.2% | 5.2% |
| 3-Year | 5.1% | 5.2% | 5.3% | 5.3% | 5.3% | 5.3% |
| 5-Year | 5.6% | 5.5% | 5.6% | 5.6% | 5.7% | 5.8% |
Source: ANZ Research
ASB
Due to a worsening global economic outlook, the ASB has revised it OCR forecast, from an endpoint of 3.25% down to a low 2.75% by mid-August. The bank also suggests that fallout from a serious tariff war could push it even lower by the end of the year.
But the ASB doesn’t think there’s much scope for longer fixed-term interest rates to fall much further. Only shorter-term rates could dip, and then not by much.
As the tables below show, the ASB notes that longer-term mortgage rates are already well below their 20-year averages, so homeowners shouldn’t expect them to drop any further and, instead, can expect them to start to rise next year.
Searching for the Cheapest Personal Loan?
If you’re looking for the cheapest personal loan, Canstar’s personal loan comparison tables can help. The table below displays the sponsored unsecured personal loan products available on Canstar’s database for a three-year loan of $10,000 in Auckland, with links to lenders’ websites. Use Canstar’s personal loan comparison selector to view a wider range of products on Canstar’s database. Canstar may earn a fee for referrals.
BNZ
Given the RBNZ’s indication at its April OCR meeting that growth and inflation could fall below expectations, the BNZ is sticking with its forecast that the RBNZ will cut the OCR to a low of 2.75% by the end of the year.
BNZ OCR Forecast April 2025
While the bank foresees the variable rate falling into the 6s, and short-term rates into the low 5s, it says longer-term rates will remain steady.
Kiwibank
Kiwibank’s economists have long called for a lower OCR, and they are blunt about what they think the RBNZ should do in the face of the offshore risks to the NZ economy. In a commentary following the RBNZ’s April meeting, Kiwibank wrote, in bold, “We now call for a further 100bps of rate cuts to 2.5% by the end of the year.”
Kiwibank thinks that at the RBNZ’s next meeting, it will revise its OCR predictions down, which will help push all wholesale and retail interest rates down further.
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Westpac
Westpac thinks the current easing cycle will finish when the RBNZ cuts the OCR to 3.25% in May. However, it says that markets have already factored in the OCR bottoming out closer to 2.75%.
As a result, longer term rates are now pretty much as low as they’re going to go, and are an attractive option for homeowners.
Westpac says, short-term mortgage rates still have a little way to fall, as the RBNZ continues to cut, but they are “still likely to remain above current longer term fixed rates”.
It says that if you fix shorter than a year, you’re betting that the OCR is going to go sub-3%, which Westpac thinks isn’t likely to happen.
Westpac OCR Forecast April 2025
Mortgage Rates vs OCR
As you can see from the graph below, in the five years in the lead-up to the pandemic, mortgage rates were pretty stable, as was the OCR, which sat around 2%. During the same period, one-year mortgage rates were around 5% and two-year terms around 5.3%.
Looking at banks’ predictions, they see the OCR settling between 3% and 3.75% over the next two years. So on those forecasts, where can we expect interest rates to settle?
If we take a rough mid-point of 3.5%, the last time the OCR was at a stable 3.5% was in the period from July 2014 to May 2015, and during that time the average one-year rate was approx 5.9%, and the average two-year mortgage rate was 6.1%.
These are the banks’ standard carded rates, so if you’ve a 20%-plus deposit and a good credit history, you’re very likely to qualify for a lower special rate.
But, ultimately, while the OCR is coming down, along with mortgage rates, it’s important to remember that the ultra-low rates that some lucky homeowners managed to lock in during the pandemic were outliers, and that the historical, average one- and two-year mortgage rates of between 5% and 6% are likely to be the future, too.
About the author of this page
Bruce Pitchers is Canstar NZ’s Content Manager. An experienced finance reporter, he has three decades’ experience as a journalist and has worked for major media companies in Australia, the UK and NZ, including ACP, Are Media, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. As a freelancer, he has worked for The Australian Financial Review, the NZ Financial Markets Authority and major banks and investment companies on both sides of the Tasman.
In his role at Canstar, he has been a regular commentator in the NZ media, including on the Driven, Stuff and One Roof websites, the NZ Herald, Radio NZ, and Newstalk ZB.
Away from Canstar, Bruce creates puzzles for magazines and newspapers, including Woman’s Day and New Idea. He is also the co-author of the murder-mystery book 5 Minute Murder.
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