Buying guide

Our NZ mortgage interest rates forecast for 2024

If you were wondering where interest rates are headed, wonder no more. We rounded up forecasts from the experts.

Last updated: 5 October 2023

NZ’s home loan interest rates are higher than they’ve been in at least 14 years. In fact, one year fixed rates more than tripled between 2021 and late 2023.

But luckily for Kiwi homeowners and investors all over New Zealand, many experts agree that the worst of the rate rises may be over and lower rates could be on the way in the mid term. So, to help you plan your mortgage moves we’ve checked with the experts to put together an NZ mortgage interest rates forecast for 2024 and beyond.

But first our NZ mortgage interest rates forecast for 2023

At the time of writing (September 27 2023) the Official Cash Rate (OCR) is at 5.5% and one year fixed mortgage interest rates are averaging in the low to mid sevens. It is likely that interest rates will remain the same for the rest of the year or increase slightly if the Reserve Bank increases the official cash rate (OCR).

The below graph from the Reserve Bank shows that it expects OCR increases are nearing an end and that if there are any more in store, they should be relatively minor (0.25% - possibly in November). This could indicate that interest rates will follow a similar trend.

In summary: According to the expert’s NZ mortgage interest rate forecasts for 2023 rates are expected to stay the same or increase very slightly as the year ends.

OCR quarterly average. Source: RBNZ data and estimates.

NZ mortgage interest rates forecast for 2024

Here’s where it gets interesting. As you can see from the above graph the Reserve Bank expects to stop increasing the OCR in 2024 then start decreasing the rate towards the end of the year. This should lead to the decreases in mortgage interest rates that we’ve predicted.

BNZ Chief Economist, Mike Jones, shared a similar view in his August economic note:

“We think mortgage rates are in the process of peaking, but the timing of any meaningful falls is sufficiently distant (and uncertain) that it makes sense to budget on rates staying around current high levels well into next year.”

Based on the expert’s NZ mortgage rates forecasts for 2024 - mortgage interest rates should stay the same for most of the year before they start falling in mid-late 2024.

So how long should I fix my mortgage interest rates for?

According to expert interest rate predictions for NZ and the opinions of prominent economists, shorter term rates are most attractive in the current environment in late 2023.

Mike explains:“Declines are expected to be more pronounced in the shorter-term one and two-year rates. For this reason, fixing at shorter terms, as appears to be the most popular strategy at present, continues to make sense to us.”

In its September 2023 Property Focus report,ANZ shared similar recommendations “Fixing for six months or one year will cost more but will prove to be the right choice if the OCR does come down. But there’s no guarantee that it will.”

Its economists go on to explain that long term 4-5 year rates may be too long so hedging your bets with a mix of terms may be the best strategy.

Many experts agree, the worst of the interst rate rises are over.

Take interest rate predictions with a grain of salt

With all that said, while it's always worth listening to economic experts, it’s also important to consider your personal circumstances when making decisions around your mortgage.

For example if you value security and would prefer to be able to plan long term around the same interest rate, it could be worth fixing your mortgage interest rates for longer. On the other hand, if you’re willing to accept a little more risk you might prefer shorter term rates, which may decrease if the OCR drops late next year.

If you’re not sure what’s right for you it’s a great idea to seek advice from a mortgage expert. For help choosing an advisor check out our guide to working with a mortgage broker here.

*We hope this article has provided some helpful information. It's based on our experience and forecasts from experts and is not intended as a complete guide or advice. Of course, it doesn’t consider your individual needs or situation. If you're thinking about applying for a home loan or refinancing, you should always get specific advice from an expert.

Author

Ben Tutty

Ben Tutty is a regular contributor for Trade Me and he's also contributed to Stuff and the Informed Investor. He's got 10+ years experience as both a journalist and website copywriter, specialising in real estate, finance and tourism. Ben lives in Wānaka with his partner and his best mate (Finnegan the whippet).