Anyone who’s watched a fixed mortgage rate tick down over the past year knows the feeling: should I lock in now, or wait another month? For New Zealand homeowners, winter 2025 has brought real relief. The Reserve Bank of New Zealand held the Official Cash Rate at 3.25% in July, and Westpac has cut its 1-year special to 4.75%, with Bank of China at 4.68%.

New Zealand Winter Mortgage Rates: What to Expect in 2025

Westpac 1-year special: 4.75% p.a. ·
Bank of China 1-year special: 4.68% p.a. ·
OCR (July 2025): 3.25% ·
Westpac 2-year special: 4.75% p.a.

Here’s how the key rates stack up after the latest repricing.

Will mortgage rates go down in NZ in 2026?

Economist forecasts for 2026

• ANZ Bank forecasts that mortgage rates will reach their lowest point in late 2025 or early 2026, according to Trade Me Property’s analysis (property marketplace).
• ANZ’s trough projections put 1-year rates at about 4.5%, 2-year at 4.6%, 3-year at 4.8%, and 5-year at 5.4% (Trade Me Property).
• Forecasters expect six-month and one-year rates to fall a little more in 2025 before plateauing or gradually increasing through 2026 and 2027 (Trade Me Property).

Key factors influencing rate cuts

• The Reserve Bank of New Zealand held the OCR at 3.25% on 9 July 2025, pausing after earlier cuts (Reserve Bank of New Zealand).
• Banks are competing aggressively on specials — Westpac’s 2-year special dropped 0.20 percentage points to 4.75% on 22 August (Westpac NZ).
• Inflation’s cooling trajectory gives lenders room to pass on lower funding costs.

The implication: the direction of travel is still down, even if the OCR is temporarily parked.

What is the current mortgage interest rate in NZ?

Average rates from major banks

• Westpac’s special 1-year fixed rate is 4.75%, and its 2-year is also 4.75%, effective 22 August 2025 (Westpac NZ).
• Bank of China NZ lists a 1-year special at 4.68% and a 6-month special at 4.98%, current from 22 August (Bank of China New Zealand).
• Trade Me Property reported that most one-year rates were around 4.85% to 4.95% in its 2025 OCR predictions piece (Trade Me Property).

Fixed vs floating rates comparison

The fixed-rate picture is tighter than the floating picture, as this side-by-side shows.

Two banks, one pattern: fixed rates are close to each other, but floating rates diverge sharply — a 1.36 percentage-point gap between Westpac’s 6.39% and Bank of China’s 7.75%.

What this means: if you’re on floating, the case for switching to a fixed special has rarely been stronger.

Will mortgage rates drop to 3% again?

Historical context of 3% rates

• Between 2021 and 2022, some New Zealand fixed rates dipped to around 3% when the OCR was at historic lows.
• That era was driven by pandemic-era stimulus and a very different inflation picture.

Current economic conditions preventing a return to 3%

• The OCR currently sits at 3.25%, already near the low end of its recent cycle (Reserve Bank of New Zealand).
• ANZ’s trough forecast for 1-year rates is about 4.5% — well above 3% (Trade Me Property).
• Pushing rates to 3% would require the OCR to fall well below 2%, which no major forecaster is currently projecting.

The pattern is clear: 3% was a pandemic anomaly, not a new normal.

How much will I repay on a $400,000 mortgage in New Zealand?

Repayment examples at current rates

• At Westpac’s 4.75% 1-year special, a $400,000 30-year mortgage works out to roughly $2,090 per month (principal + interest).
• At 6.89% — the rate many borrowers were fixed at in late 2024 — the same loan costs about $2,630 per month.
• The difference: around $540 per month, or $6,480 per year.

Impact of rate changes on monthly payments

• Westpac’s 2-year special dropped 0.20 percentage points on 22 August — from 4.95% to 4.75% — which would cut about $25 per month on a $400k loan (Westpac NZ).
• Borrowers coming off a 6.89% fixed rate and refixing at 4.75% could save roughly $540 per month — a meaningful chunk of household cash flow.

The takeaway for borrowers: every 0.25% move shifts the monthly bill by roughly $50 on a $400k loan, and those increments compound over a full mortgage term.

What is the 5 year prediction for mortgage rates?

Mid-term rate outlook (2027–2030)

• Trade Me Property reported that forecasters expect rates to plateau or gradually increase through 2026 and 2027 after a slight fall in 2025 (Trade Me Property).
• ANZ’s trough projections suggest 5-year rates stabilising around 5.4% — the highest of the common terms (Trade Me Property).

Factors shaping long-term rate direction

• Global inflation trends and central bank policy outside New Zealand will influence domestic rates.
• The RBNZ’s own OCR path — currently paused at 3.25% — sets the ceiling for how low fixed rates can go (Reserve Bank of New Zealand).
• Bank competition, like Westpac’s 5-year special at 5.39%, hints that lenders are pricing for a prolonged period of moderate rates (Westpac NZ).

What this means: the longer the term, the more you’re paying for insurance against volatility.

Timeline of rate moves and forecasts

• July 2025: RBNZ holds OCR at 3.25% (Reserve Bank of New Zealand).
• 22 August 2025: Westpac cuts 1-year and 2-year specials to 4.75%; Bank of China lists 1-year at 4.68% (Westpac NZ, Bank of China NZ).
• Late 2025 / early 2026: ANZ expects mortgage rates to hit their lowest point (Trade Me Property).
• 2026–2027: Rates projected to plateau or gradually rise (Trade Me Property).

The sequence so far shows a clear downward path, with the open question being how deep the trough goes before the turn.

What’s confirmed and what’s still unclear

Confirmed facts

• Banks have lowered fixed rates from 2024 highs — Westpac’s 2-year dropped 0.20pp on 22 August (Westpac NZ).
• The RBNZ has cut the OCR from its peak and held at 3.25% in July 2025 (Reserve Bank of New Zealand).
• Monthly repayments for new borrowers have dropped significantly — a $400k loan at 4.75% costs about $540 less per month than at 6.89%.

What’s still unclear

• How low rates will go in winter 2025 — Westpac’s cut was only 0.04pp on the 1-year, suggesting limited near-term headroom (Westpac NZ).
• Timing of future OCR decisions — the RBNZ has not committed to further cuts (Reserve Bank of New Zealand).
• Whether rates will drop below 4% — ANZ’s trough forecast suggests 4.5% for 1-year, but that’s not a guarantee (Trade Me Property).

The confirmed facts give borrowers solid footing; the uncertainties are about timing, not direction.

What economists and lenders are saying

“The official cash rate remains at 3.25 percent, providing a stable base for monetary policy.”

— Reserve Bank of New Zealand, July 2025 OCR announcement

“Westpac NZ supports homeowners and savers following the OCR cut, with special fixed rates now at 4.75%.”

— Westpac NZ media release

“Most one-year rates were around 4.85% to 4.95%, with forecasters expecting them to fall a little more in 2025.”

— Trade Me Property analysis

Winter 2025 has delivered what many borrowers were hoping for: rates that are actually moving in their favour. The window won’t last forever — ANZ’s forecast puts the trough in late 2025 or early 2026, and after that, the tide turns. For a household refixing a $400,000 mortgage, the difference between locking in now at 4.75% and waiting for a rates rebound could be hundreds of dollars a month. The choice is clear: act on the current specials while banks are competing, or accept the risk of higher rates in 2026.

Frequently asked questions