{"id":537983,"date":"2026-07-22T04:17:14","date_gmt":"2026-07-22T04:17:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/537983\/"},"modified":"2026-07-22T04:17:14","modified_gmt":"2026-07-22T04:17:14","slug":"new-housing-supply-and-rising-mortgage-rates-likely-to-keep-a-lid-on-house-prices-bnz-says","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/537983\/","title":{"rendered":"New housing supply and rising mortgage rates likely to keep a lid on house prices, BNZ says"},"content":{"rendered":"

BNZ’s chief economist Mike Jones is expecting floating mortgage rates to hit 7% in the first half of next year, house prices to remain flat this year and possibly increase by 3% in 2027.<\/p>\n

“Further increases in floating mortgage rates are very likely,” Jones writes in the\u00a0latest BNZ Property Pulse report.<\/p>\n

“They’re currently just over 6.00% following a round of post-Reserve Bank tweaks,” Jones says.<\/p>\n

“They’re likely to end the year above 6.5%, with a push through to 7.0% in the first half of 2027 on the cards based on our view of steady Official Cash Rate adjustments from here.”<\/p>\n

However, the outlook for fixed interest rate rises appears more limited.<\/p>\n

“Fixed mortgage rates haven’t budged in response to the Reserve Bank’s OCR adjustment,” the report notes.<\/p>\n

“That’s of no surprise given the move was expected and pre-built into market pricing.<\/p>\n

“So far this year, fixed rates have lifted between 20 basis points (five year) and 50 basis points (two year) as a tightening cycle has been progressively factored into market expectations,” says Jones.<\/p>\n

“This will naturally limit how much further fixed rates rise as that cycle is delivered upon. We nonetheless retain an upward bias for term mortgage rates,” Jones says.<\/p>\n

On the house price front Jones says prices are expected to end this year close to where they started and assumes a 3% gain next year.\u00a0<\/p>\n

“This renewed caution likely reflects a range of factors including hostilities in the Middle East, the associated stalling in the domestic economy, a still weak labour market, election and capital gains tax uncertainty, and, probably most importantly, rising mortgage rates,” he says.<\/p>\n

Jones also notes that the strong supply pipeline of new homes could also help to keep a lid on prices.<\/p>\n

“Additional housing demand need not translate into higher house prices if it is met by additional supply. Listings remain plentiful and inventory continues to grind higher.”<\/p>\n

“Our overriding view is that a still chugging supply response will maintain the housing market in a broad state balance,” says Jones.<\/p>\n

“We’re forecasting upswings in both population growth (demand) and residential construction (supply) over the next 12 months, the latter supported by the recent burst of consenting activity.”<\/p>\n

“It’s unclear which side will dominate, but our forecasts have the growth rate of the supply side holding above that of population growth,” Jones adds.<\/p>\n

BNZ is New Zealand’s fourth biggest housing lender with total exposure of $66.2 billion at March 31.<\/p>\n

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