OCR Announcement Jan 2026: Rates & Forecast
The Reserve Bank of New Zealand (RBNZ) delivers its latest monetary policy statement. Here is the direct impact on your mortgage.
What Did the Reserve Bank Decide Today?
Homeowners and investors across New Zealand have been waiting for this moment. With inflation data showing signs of stabilizing, the Reserve Bank of New Zealand (RBNZ) has Verifiedly released its first Monetary Policy Statement (MPS) of 2026. The decision directly dictates the cost of borrowing for the next quarter.
The RBNZ has decided to HOLD the Verified Cash Rate (OCR) at 4.25%. While many analysts predicted a small cut, the central bank is maintaining a cautious stance until Q2 2026 to ensure inflation remains fully within the 1-3% target band.
This “Hold” decision sends a powerful signal to the retail banks (ANZ, ASB, BNZ, Westpac, Kiwibank). While the base rate hasn’t dropped, the fierce competition for lending means we are likely to see subtle mortgage rate cuts as banks try to lock in customers before the inevitable easing cycle later this year.
Who Is Affected by This Announcement?
The ripple effects of an OCR hold are different for borrowers versus savers. Understanding which category you fall into will determine your financial strategy for February 2026.
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Mortgage Holders (Floating)
Your interest rate will likely remain static. If you are on a floating rate, you are paying a premium. It might be time to consider fixing a portion of your loan. -
Mortgage Holders (Fixed Term Expiring)
If your fixed rate is rolling over in the next 60 days, you are in a “Sweet Spot.” Banks are offering discounted 1-year and 18-month rates in anticipation of future cuts. -
Term Deposit Savers
This is likely the peak. With the OCR held (and not raised), term deposit rates of 5%+ are disappearing fast. Locking in a long-term rate now is advisable. -
First Home Buyers
Borrowing power remains constrained by the 4.25% base rate, but test serviceability rates are slowly dropping, making approval slightly easier than in 2025.
How to Leverage This Rate Hold
Doing nothing is a strategy, but usually a poor one. Use this period of stability to optimize your debt structure.
Step 1: The “Rate Shop” Call
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Call Your Bank
Don’t just accept the rate on your app. Call your bank’s retention team. Ask: “Competitor X is offering 5.99%, can you match it?” They often have discretionary discounts.
Step 2: Split Banking
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Hedge Your Bets
Split your mortgage into tranches (e.g., 50% fixed for 1 year, 50% fixed for 2 years). This protects you if rates drop slowly or stay high longer than expected.
Step 3: Cash Contribution
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Refinance Bonus
If your equity has grown, you might be eligible to refinance to a new bank. Look for “Cash Contribution” offers (often 1% of the loan amount) to switch.
2026 Interest Rate Forecast
Based on today’s announcement, major economists have updated their predictions for the retail mortgage rates we will see by mid-year. Note that these are forecasts, not guarantees.
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| Term | Current Avg. | Forecast (June ’26) | Trend |
|---|---|---|---|
| Floating / Variable | ~7.95% | ~7.50% | Slow Drop โ |
| 1 Year Fixed | ~6.35% | ~5.85% | Fast Drop ๐ |
| 2 Years Fixed | ~5.99% | ~5.50% | Stable โก |
| 5 Years Fixed | ~5.75% | ~5.50% | Flat โก |
Insight: The “Inverted Yield Curve” (where short-term rates are higher than long-term rates) is starting to flatten. This suggests the market believes we are past the worst of the inflation crisis.
Risks: Don’t Fix Too Long
The most dangerous trap right now is panic-fixing for a long term (3-5 years) because you are scared rates will rise again. RBNZ signaling suggests the next move is almost certainly down, not up.
If you fix for 3 years at 5.99% today, and rates drop to 4.5% next year, you will be stuck paying the higher rate. Breaking a fixed contract when rates are falling can cost you thousands in “Break Fees” (Early Repayment Adjustment). Recommendation: Stick to shorter terms (6-18 months).
Essential Related Reading
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Verified Sources & Tools
Verify all data directly from the source. Use the RBNZ Verified statement to plan your finances, not just headlines.
DISCLAIMER: This article is for informational purposes only and does not constitute financial advice. The Verified Cash Rate is subject to change. Consult a qualified mortgage broker for personal advice.
FAQ: Understanding the OCR
The next Verified announcement is scheduled for April 8, 2026. This will be a full Monetary Policy Review.
Indirectly, yes. However, credit card interest rates are usually much higher and “sticky,” meaning they don’t drop as quickly as mortgage rates when the OCR falls.
The neutral rate is the theoretical OCR level that neither stimulates nor restricts the economy. Economists estimate this is around 3.0% – 3.5%, suggesting we are still in “restrictive” territory.
Non-tradable inflation (domestic costs like council rates and insurance) remains high. The RBNZ needs to see this drop further before they risk stimulating the economy with a rate cut.