Just over a week ago, we noted that pressure was building for some fixed home loan rate rises because we were watching swap rates starting to rise rather sharply.
Although there has been little movement in retail rates in the interim, things have got more pointed since then. This is what that same swap rate chart looks like now. That is a +10 bps rise in just ten days to 3.45% The two year has risen to 3.81%, in an even sharper move (+16 bps).
When one year swap rates were last at 3.45% in February 2025, the one year fixed home loan rate was 5.50%. That is +75 bps higher than the ~4.75% it is today.
When the two year swap rate was last at 3.80% in September 2024, the two year fixed mortgage rates was at 5.80% which is +55 bps higher than currently..
We suspect there will be some substantial movements up in fixed rates in the coming days and weeks.
What about savers?
Then there is the question of term deposit rates. If wholesale costs rise and fixed rates rise, then you might expect TD rates to rise as well.
But that will depend on loan demand as much as wholesale cost. Why raise more funds if you can't lend them?
Savers have been moving funds into TDs quickly recently. But much of that movement has been just shifting from zero rate transaction accounts or low rate savings accounts rather than from growth in household deposits.
If banks can't lend those funds to a growing set of borrowers, they will be reluctant to compete for more TD funding with higher rates. Given auction transactions are at their lowest point in three years, that indicates housing market demand is low. Savers may have to wait until the spring (in at least six weeks) and hope housing demand turns higher in the normal way.
But are times normal?
Obviously, the force moving these background wholesale rates up is 'risk', principally of higher global inflation ahead, and the expected global monetary responses to check its rise. Geopolitical uncertainty is a key driver of the higher inflation risk.
You can also see this clearly in a long perspective of the benchmark long bond yield that the 30 year trend of lower rates turned after the US elected Trump first. We now seem to be in a new long trend of rising rates. Investors want to be paid for the elevated Trump risk, and even after he fades the issues he leaves behind will still be there, magnified.
Rates for shorter terms than the 30 year one above display more volatile and bumpy outcomes over the same timeframe, but the overall tends are roughly the same. We are in a new long-run uptrend.
And yes, the New Zealand equivalents are different again. But we can't escape the US trends for two reasons. They are the world's largest capital market and by far. And secondly, New Zealand is a net debtor nation and we are consigned to taking what the world offers. To send capital our way, we have to provide returns higher than the core benchmarks.
Back to a more short-term perspective, if you are a borrower with a fixed rate, you need to ask yourself whether it is worth waiting for 'spring' and the anticipated competition that often arrives in the more elevated real estate selling season. Is that likely to happen again in 2026?
Fixed mortgage rates
Select chart tabs
Daily swap rates
Select chart tabs
47 Comments
Yes second, big downleg coming for NZ housing.
No way a NZ housing price recovery is possible, until DTIs hit 4x again.
This is despite the landlord Hosking, telling all on the radio, almost every week, get into housing folks, as its about to go up and "OFF TO THE RACES" soon.
Where is the FMA?? - On the Hosk, pied pipering, many housing investor dummies, over the financial cliff.
Poor old Hosks rentals must all have long snorkels, as they are obviously underwater? He is trying to refire a dead housing ponzi, that he is eyeballs deep in??
He is talking his own book. Shamefull.
Speculandlords about to get a bad case, of Bad Debt induced, double brownpantnzing.
Looking forward to the full FRED 2026 review in 2027, with the pending second downleg of a dam bursting, showing NZ housing getting somewhat closer towards improved affordability: Yet still a lot of downleg and dam bursting work to be done, in this regard:
https://fred.stlouisfed.org/series/QNZR628BIS
Capitulation in 2027 and 2028, all at sequentially lower and lower selling prices.
Why is everyone so fixated on housing? More important is what this will do to the economy and unemployment. Very unusual to have a tightning cycle when the economy is dead, I fear it could cause more problems than economists are currently predicting.
The market is simply pricing new Debt pricing correctly, given that inflation will be higher into the future, simply due to real resources being more fought over and scarce.
The repricing of Debt into a ĺongterm uptrend, is positive for savers and new debt buyers.
Old Debt holders are getting the result of stupid speculation. Burns.
Savers finally being compensated for risk and rising inflation is good. Then investors will be forced to actually check that their debt funded investments are productive and will generate REAL, positive yields.
Just dumping 500 or 900k Debt (yes BAD debt, chasing obvious speculative gains) Into a rental, at terrible yield, was always dumb and inviting disaster. So disaster arrives now (over last 5 years) and will rattle specuvesters cage, for a few more years......
Will this early stage, yet multi decade run of higher inflation and higher debt costs peak at: 8, 10, 15 or 20%? No one can be sure.
Yet lifelong lessons will be learned on moral hazard and speculation.
One thing is obvious, the NZ national sport, of housing speculation and gambling, will be drowned and beaten out of our national mindset for good.
Truly Good Times alAhead, after the bad debts, exit the snakes sickened belly.
Why is everyone so fixated on housing
Because everyone needs shelter. That the Govt allowed it to be turned into an investment model that exploited that, while sending our productive effort offshore as bank profit is shameful.
Rising interest rates won't make home ownership cheaper, unless you're rich enough to not need a mortgage that is. And rising unemployment rate won't help either.
Maybe in the long term higher interest rates will be a good thing (debatable), but there might be a lot of pain beforehand.
might be a lot of pain beforehand
For the interest only speculators absolutely. When next their loans roll due, loans that their model mean no principle is paid off, yes indeed... self inflicted pain. But Ill sell a few say Mr Speculord... but who will buy them at specuexit greed prices?
Meanwhile values grind lower, so the one thing Mr spechlord has less of every day (paper specu-equity) if further exposed. Their Jenga tower of debt becomes increasingly exposed. Add in and economy on the rocks, rents grinding lower, and future young educated renters heading west at a rate of an A380 a day, its a s@#t show.
There is a clear reasons the banks are doing deals on high equity position. Their over all loan book needs proping up to try and balance the naked speculords. The noises they make when you discharge you loan contract, aka their contract ownership of your property, is hilarious.
Pepto 💊 anyone...?
What about everyday people that have a home and mortgage, particularly those that bought recently. What about people that lose their job as unemployment keeps climbing. What about all the businesses that are falling over as people's discretionary spending dries up.
I have one property, a small amount of debt and hopefully a stable job, so it makes little difference to me. But I still don't want our economy to get even worse, unlike most interest commentators.
Many of the bussinesses falling over were in trouble and only saved by covid support and choosing to not pay their due tax. These are insolvent zombies.
Those that bought a house at peak have a real issue. Perhaps some of the funding given to speculords could be used to support them.
That the Govt allowed it to be turned into an investment model that exploited that, while sending our productive effort offshore as bank profit is shameful.
Assuming you're referring to bank profits. Those profits were not for "productive efforts". The profits were largely for making digital entries in a ledger. The buying / selling of houses has never required really "productive effort" on the banks' part.
To clarify, the income earned by the averageman. Then paid out jn rent and or mortgage payments for over priced housing.
So NZs workers productive effort.
Why is everyone so fixated on housing?
"For lower to middle income households in particular, as housing costs approach 40 percent or more of a household's income, it becomes more likely that they will find it difficult to meet other everyday expenses" (Stats NZ Feb 2026).
Maybe this has something to do with it???
Higher interest rates will mean the mortgage is a higher percentage of your income.
But only if you are stupid enough to not see that higher rates in a stagnant economy will result in lower house prices with smaller mortgages and thus less debt to service (so no real change to the % of income on mortgage payments)
No real change in mortgage repayments, rising unemployment and low pay rises. How is that great for FHBs?
JimboJones,
I am in the Kiwibank camp on this. I think the RB should have waited longer. Literally the day after their decision, the fragile ceasefire with Iran broke down and oil is touching $100 a barrel. Yes, that will have an inflationary effect, but it will also reduce consumers' spending power and confidence, while raising costs to business. With further rate rises to come, I fear that the RB risks pushing the economy into recession.
‘Very unusual to have a tightning cycle when the economy is dead’
It’s clear you only understand the economics of falling interest rates and inflation and rising house prices/stocks etc. You should go back and study economics and finance from the post WW2 - early 1980’s period. Then again I think you are representing most of society who have been fooled into thinking they understand how things like economics and housing markets work, and yet you’ve completely blinded by recency and confirmation bias of the past 3 decades (which are in fact extremely unusual economic and financial conditions - so called goldilocks conditions of falling inflation and interest rates, and rising housing and stock prices). The next few years and decades might be quite the shock if you are stuck using a 1990’s - 2020 mental economic model.
With stagflation it’s completely normal to see rising rates while the economy stagnates - and there being little the central banks can do to stimulate - ie the 180deg opposite of the past 30 years.
My mate AI says:
New Zealand has experienced major stagflation once
in its modern economic history, during the protracted crisis of the 1970s and 80s
You reckon it's a common occurrence?
Nope. Text books all say avoid at all cost, but printed money looking for the least taxed outcome and with Govt support has put us there again.
Please, David, stop blaming Trump.
Enough, already.
Trump is a symptom - of something you seem to need not to recognise - not a cause. Your 'even after he fades' comment still blames him. That comment is close; the issues will still remain. Yes, the china shop will be messier because of the bull - but why was the bull let loose?
Perhaps Interest.co.nz could look to expending the kind of journalistic effort recently applied to some petty crookery (in proportion, that is all it was), to looking at the issues which put Trump there, twice.
Thank you for your consideration in this matter.
Trump wasn’t elected to be a symptom. Maybe there hasn’t been a decent US president for a long time but he could still try. This is happening on his watch.
From Ed Steer this week..
Meanwhile, the two west vs. east conflicts continue to drag on...with the western globalist power elite...who are not even attempting to hide what they are doing anymore, are fanning their respective flames at every possible opportunity...as they want these wars.
As Hemingway pointed out back in 1931..."The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists."
Hard not to look at the bubble model and not see rising rates as the final bulltrap.
🍿
Feels a lot like 2007.....
Except this time the property Gambling was worse and bad, speculative, low yielding Debts much, much higher....
Popcorn sales, is the only nearterm industrial brightspot.
It's worse than 2007, by at least an order of magnitude.
We've added nearly 2 billion people in that time - call it a 25% increase.
And every day, we've burned through 100 million barrels of oil, and an equivalent in gas and another in coal. That's a billion (x3, equivalent) every 10 days. 19 years @ 36 periods - work it out. That's the finite underwrite, diminished.
Then there's the leverage - and a lot of the levering is on residual 'values' which were levered in the first place (borrowing levered-off bubble-valued property, being the classic). There we agree.
I wish us all well...
Maybe Anthropic's Claude will become the white night in digital armor? Hacking the world financial system and implementing global debt forgiveness? And while doing it, disable all nuclear weapon systems at the same time.
Just thinking optimistically :-).
As the people that own the banks take ever greater positions in such companies, I suggest the chance of global debt forgiveness is less than winning lotto 10 weeks in a row.
Nice idea though.
The bubble popped in 2023. Did you not notice? We are in consolidation mode now. More townhouses are selling than last decade, which is keeping a lid on house prices - especially in thwe North Island. Down here in the South Island, most markets continue to head northwards. Perhaps you can dial down the doomsday hype and have a nice long cup of coffee.
Vulnerable, I take it?
No. But nice try.
It's like watching the blind lead the blind.
Here's what is playing out at the macro level.
First, businesses are either teetering on the edge or in a kind of hibernation. At the aggregate level, businesses are paying down debt (2.3% of GDP net in the last year). Companies with market power are sitting back, buying labour and stuff for X and selling it for X + margin. The little pick-up in GDP in Q1 was thanks to business profits going up as business and mortgage debt servicing costs reduced. Less money going to savers and the banks, more money being spent.
We are back borrowing for housing again - mortgage debt is up over $20bn on last year (net). House prices are not responding because there is a lot of stock and employment rates are low compared to the boom times. It generally takes two wage slaves with job security to bid up the price of weatherboard shacks. While mortgage debt is going up, other households are paying down debt. Net impact is household borrowing going up by just 0.7% of GDP in the year to March 2026. That's the lowest for at least 40 years (bar major events and Govt deficits in 2020 and 2011!)
While our demand drain offshore (current account deficit) has reduced to 3.7% of GDP and is now back to pre C19 levels, households are running that tiny 0.7% deficit, and businesses are running a 2.3% surplus. So, Govt deficits are running at over 4% of GDP (quietly through the capital programme). They have to. It's just maths. Those Govt deficits are keeping the economy from crashing.
The idea that RBNZ can hike interest rates in this environment while Govt tighten up fiscal policy next year is pure fantasy. I am not known for my cheery outlook, but I suspect the tiny little bit of nominal YoY job growth we have seen in the last couple of months will fade back to negative over the coming months. Mind you it is still below population growth. We're ruled by idiots.
Excellent points - agree.
I don't think it's so much 'We're ruled by idiots.' as ruled by the self interested and the elite groups they belong to because for most voters in the general elections it's a poorly informed vote, akin to a complacent impulse, and from a what's in it for me perspective. To be more fair to voters it's difficult for them to choose who to vote for because politicians make promises that are rarely kept. If the political contenders don't bait the voters with promises they won't keep they imo will probably not be elected... so an endless cycle of unmet promises while the national economic decline continues. We get who we vote for. Better voter discernment and education is needed and that task falls on the media, but also the general public needs to take the time to read, listen and view in depth reports, analysis and the like from multiple sources that challenge the blather and attention seeking simplistic political statements designed to divert attention from the underlying challenges and intractable problems facing us - especially an overheating world, resource depletion and pollution.
I think you mean we ‘were ruled by idiots’. We are now sleeping in the uncomfortable bed made by the selfish and foolish decisions and policies of the leaders of the past 2-3 decades.
We are now sleeping in the uncomfortable bed made by the selfish and foolish decisions and policies of the leaders of the past 2-3 decades.
Agree and disagree. You're suggesting that the ruling elite knew that the economic model of creating credit for non-productive purposes / consumption effect would eventually splutter and run out of steam. I think that all they possibly believed that the Anglosphere had stumbled upon the economic elixir that was more or less antifragile. The hoi polloi definitely bought in to that idea.
Therefore, it has made complete sense for them to accept the Ponzi for what it is.....if they wanted a decent stab at taking or retaining power.
'I think that all they possibly believed that the Anglosphere had stumbled upon the economic elixir that was more or less antifragile. The hoi polloi definitely bought in to that idea.' I don't agree (though it's plausible) because the generations that experienced WW2 ruled the roost in business and government until recently, and they suffered genuine deprivation and suffering- enough to make it difficult for the elixir to work, and some of my generation (myself included) suffered an 18% 1st mortgage+ 21% 2nd mortgage in the 1970's and were forced to sell their homes, so no elixir has worked since for them either. Overall I reckon the politicians knew and cashed in regardless of the devastating effects on the low paid and younger generations who were and are being shafted.
Google Gemini states-
New Zealand MPs privately hold massive real estate portfolios, collectively owning $379 million worth of property
. Contemporary tracking via the New Zealand Parliament's Register of Pecuniary Interests
exposes a vast property divide between lawmakers and the general public, revealing that sitting Members of Parliament (MPs) own an average of 2.2 houses each
Current Ownership Landscape
Modern data compiled by major news investigative teams—including The New Zealand Herald
and The Spinoff
—highlights several stark trends regarding private property ownership in Parliament: [1, 2]
- High Concentration of Multi-Property Owners : Out of 120+ sitting MPs, 91 hold a stake in more than one property , and 63 own three or more. Only a tiny fraction (roughly 7% to 8%) do not own any real estate.
- The Party Wealth Gap
: Property wealth is highly skewed by political allegiance. The right-leaning National Party governs with a disproportionately large share of parliamentary real estate wealth—holding roughly 55% of the total pool. - The Age and Generational Divide
: Older MPs and Baby Boomers control the lion's share of Parliament's property portfolio, often owning their assets outright. Conversely, younger millennial or Gen Z lawmakers typically own only a single family home, or do not own property at all.[]
- Cabinet Portfolios
: Cabinet ministers and political leaders maintain a higher average, holding an average of 3 houses each . For instance, Prime Minister Christopher Luxon previously stood as the largest individual landlord in Parliament with 7 properties, though he downsized his portfolio to 3 properties.
Why We Know Today vs. The 1970–2000 Black Box
The ability to pull these precise property metrics exists solely because of transparency laws introduced in 2005. In contrast to the 1970–2000 era, today's public can actively view: [1]
- The Annual Pecuniary Register : Every Member of Parliament must legally declare their family homes, investment/rental units, commercial buildings, and holiday baches (holiday homes) by February of each year.
- Scrutiny of Systemic Loopholes
: Because the system is actively monitored, errors and historical omissions are regularly caught. For example, senior politicians like Gerry Brownleehave faced intense media scrutiny for historic property declaration discrepancies dating back 20 years
.
[1]
I broadly agree. Economic models and the reckonomists that rely on them completely ignore private debt, ecological constraints, and market power (onshore and offshore). They truly believed that liberalised finance and deregulation/privatisation free had ushered in a new age of endless growth. Idiots.
In 1992 our unemployment rate was over 10%. Are you saying NZ economy was better then?
People forget how bad unemployment was in early 90s. Youth unemployment over 25%. It might get there again but not quite yet.
People also forget that the early nineties recession was a walk in the park compared to the mid eighties recession for employment.
Those couple of years in the early 90s were truly horrific. But we should not use that hellish period as a baseline.
You can't really blame the current RBNZ, they are out of their target band so they have to do something. They shouldn't have made the final 0.25% cut in the first place, and they should have made the increase at the previous review when fuel was actually going up instead of waiting until it came down, but neither would have made a huge difference.
I'm not a fan of our overly prescriptive inflation target. I don't like the focus on the 2% midpoint which requires the RBNZ to play with the OCR continuously instead of providing stability. And at the moment unemployment is a bigger problem than inflation so the RBNZ should be allowed to factor that in. 4% inflation is not worth panicking about.
We are, but I suspect that the RBNZ have one and a half eyes on the (perceived value of) NZD.
You are replying to a person who claims to be an engineer.
Have a look at the thread.
Interest-rates interest-rates interest-rates - and nothing - zilch - about the why or the where to from here? Indeed, a reference to the 1970s - the classic economics move (backcast-to-extrapolate, no real measures so flying blind).
The RBNZ are in exactly the same position - whether they know it privately, or not (I suspect not). Their toolbox is virtual, not real - but it is realities which are driving us now; human overshoot, overconsumption, overpollution. Can't solve those by interest manipulation.
I dont think JFoe has ever claimed to be an engineer.
:)
Why we are ruled by idiots
Amazing video, thanks for the link!
The chickens are slowly coming home to roost, when a countries economy is largely based on the cost of a basic human need continuing to rise.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.