New Zealand Mortgage & Market Update: November 2025 – What the OCR Cut Means for Borrowers

The Big Shift: RBNZ Cuts OCR to 2.5%

On 8 October, the Reserve Bank of New Zealand (RBNZ) made its boldest move in months, cutting the Official Cash Rate (OCR) by 50 basis points to 2.5%. Inflation has eased back within the 1–3% target band, giving the RBNZ room to shift focus from inflation-fighting to supporting growth.

The next rate reviews are set for 26 November 2025 and 18 February 2026, but for now, this marks a clear change in tone.

The takeaway: borrowers have entered a more favourable environment, with lower rates likely to continue filtering through the economy over coming months. If you’re on a floating rate or have a fixed term expiring soon, this is your best opportunity in over a year to reassess and potentially lock in better terms.

Why This Cut Matters for Mortgage Holders

When the RBNZ eases policy, banks tend to follow. Fixed mortgage rates have already reacted, and while the central bank remains cautious, the signal is clear – we’ve moved from a defensive stance to a growth-supportive one. Here’s what it means for you:

• Short-term borrowers: expect to see lower refix rates in coming months.

• Floating borrowers: you’re likely to see the benefit faster, as floating rates typically move soon after an OCR adjustment.

• New buyers: lower servicing costs improve affordability, though lenders will still stress-test your loan at higher levels for prudence.

That said, the RBNZ’s tone suggests they’re not looking to unleash a new boom – the focus is on sustainable, measured growth, not cheap money at any cost.

NZ Mortgage Rates: A Better Window to Re-Fix

Following the OCR cut, major lenders trimmed their rates:

• 1-year fixed: ~4.49%

• 2-year fixed: ~4.65%

• 3-year fixed: ~4.85–4.90%

Some banks made these moves even before the official announcement, anticipating the policy change. Industry commentary (including from Canstar and Squirrel) suggests the 2- to 3-year range currently offers the best balance between rate savings and flexibility.

Practical takeaways:

• If your fixed term ends soon, this is one of the best refinancing windows we’ve seen this year.

• Locking in for 1-2 years balances rate certainty with room to adapt if rates fall further.

Keep an eye on the RBNZ’s new Financial Policy Committee (FPC), due to begin in early 2026. This body could eventually adjust lending ratios or DTI rules – meaning credit settings may tighten again.

Housing Market: Signs of Stabilisation, Not a Boom

October data from the Real Estate Institute of New Zealand (REINZ) shows the market is steadying:

• Median price: up 1.9% month-on-month

• House Price Index: up 0.5% in October

• National market value: about NZ$1.65 trillion, per Cotality

Regionally, South Island centres are showing more consistent growth, while Auckland and Wellington remain subdued. Spring activity is improving, but the pace is moderate – this is a recovery phase, not a frenzy.

For homeowners: modest price growth means your equity position is improving, reducing refinancing risk.
For buyers: affordability is easing slightly, but don’t assume capital gains will rebound quickly.

The Hidden Trends Behind the Headlines

Even with lower rates, the fundamentals remain mixed:

• Construction remains soft: new dwelling consents are subdued, which helps stabilise prices but limits supply growth.

• Affordability still stretched: despite easing rates, high price-to-income ratios keep debt burdens heavy for many households.

• Regulatory changes coming: with the FPC’s creation, future lending policy could evolve – potentially influencing borrowing limits or stress-testing rules.

• Regional divergence continues: some local markets are rebounding faster than others, especially in areas with stronger employment or tighter housing stock.

• External risks linger: global trade or commodity shifts could still influence rates and housing sentiment in 2026.

Strategy Guide: How to Approach Re-Fixing Right Now

1. Time Your Move
If your loan comes up for renewal in the next 3–12 months, don’t wait passively – rate conditions are already improving. The next RBNZ announcement in late November may spark further changes, but those waiting for a “perfect” drop could miss today’s gains.

2. Choose Your Term Wisely

• 2–3 years: often the sweet spot – lower rates, moderate flexibility.

• 1 year or floating: good for those expecting to move or refinance soon.

• 4–5 years: great for stability, but risk missing further small declines.

3. Review Your Budget
Lower rates can ease your monthly repayments – but this is a good time to build buffer rather than expand spending. Use savings from a lower rate to pay down debt faster or strengthen your financial cushion.

4. Factor in Local Conditions
In stronger regional markets, locking in longer terms may make sense. In slower or more volatile areas, consider shorter terms to keep optionality.

Read more about Fixed vs Floating mortgages and which Is right for you and when and why you should refinance.

Our Bottom Line

November 2025 marks a meaningful turning point for borrowers. With the OCR now at 2.5%, inflation easing, and fixed mortgage rates falling, the environment has shifted from restrictive to cautiously supportive.

For homeowners and investors alike, this is a window to refinance or re-fix strategically – balancing lower costs with flexibility. In short:

• Borrowing conditions are improving.

• Mortgage rates are trending lower.

• The housing market is stabilising.

But don’t assume the easing cycle will last forever – take advantage of current rates before the next wave of policy adjustments. Need clarity on your best refixing term or rate strategy? Our mortgage specialists can model your repayments, compare lender offers, and show how small rate differences could impact your long-term cashflow.