That\u2019s the message from the housing market experts OneRoof spoke to after last week\u2019s release of the Consumer Price Index data for the June quarter, which showed annual inflation at 4.1% \u2013 its highest point in two years.<\/p>\n
The experts said home loan costs will almost certainly go up, but that rate rises would not be severe, noting that the major banks had already priced in likely increases in the Official Cash Rate into their fixed terms. <\/p>\n
Andrew Chambers, CEO of mortgage company Tella, told OneRoof that the consensus in the industry was that rates would be back into the fives next year.<\/p>\n
\u201cUsing the one-year fixed as a benchmark, we\u2019d expect to see it rise by 0.5 percentage points in that time,\u201d he said. <\/p>\n
The OCR could go up by more than that, but Chambers was unsure that banks would pass on all of the rise, saying the market was still competitive. <\/p>\n
Customers were already paying a premium on longer-term rates, he said, pointing to the one-percentage-point difference between one-year and three-year fixed terms. <\/p>\n
\u201cAlso, long-term rates are still well below the mortgage test rates, so unless they go into the eights we don\u2019t expect to see too much pain,\u201d Chambers said.<\/p>\n
Discover more:<\/p>\n
– Tony Alexander: Gloomy housing market picks itself off the floor<\/a><\/p>\n – ‘Wow factor’: Historic home built by New Zealand rugby legend for sale<\/a><\/p>\n – Historic church building seized from cannabis grower now for sale<\/a><\/p>\n But the rate rises would have an impact. For example, the increases could add $290 to the monthly mortgage bill of a household with a loan of $700,000. That would mean less money for shopping or\u202frestaurants and cafes.<\/p>\n Brad Olsen, CEO of data analysts Infometrics, said the global economic outlook had changed significantly and rapidly. The two-year swap rate had risen by 34 basis points since the start of July. <\/p>\n But because banks had already priced much of that lift into their own rates, another hike in the OCR in September might not have as big an impact. <\/p>\n Olsen thought floating interest rates could hit 6.4% in the last quarter of this year, and that the one-year fixed rate would reach the low fives, peaking at 5.5% come 2028. <\/p>\n Petrol prices are expected to rise again as a result of renewed conflict in the Middle East. Photo \/ Getty Images<\/p>\n The Reserve Bank would want to get the OCR back to 3% by the end of this year or the start of next year, and then hit pause, he said.<\/p>\n People should work out their own best- and worst-case scenarios around mortgage fixes and job security, he said. <\/p>\n People who fixed for 2.2% five years ago during Covid turned out to be the smartest, he said, but at that time there were fears that the economy might crash and rates would drop even lower. \u201cYou only knew five years on if you\u2019d done a good thing or not,\u201d he said.<\/p>\n \u201cI think people should be going through the motions of \u2018do we have enough of a buffer to make this work if things go higher than we first anticipated?\u2019.\u201d<\/p>\n Even if people could handle the mortgage, other costs were high; the recent inflation data showed electricity prices were up 12% year-on-year, which was \u201cpretty hefty\u201d, Olsen said. <\/p>\n BNZ chief economist Mike Jones: “There are just so many balls in the air.\u201d Photo \/ Fiona Goodall<\/p>\n \u201cWe are still seeing what has effectively been the worst oil shock in half a century.\u201d<\/p>\n BNZ\u2019s chief economist, Mike Jones, said fixed rates had \u201ca little bit more to go but not a whole lot, and that\u2019s because the Reserve Bank\u2019s tightening cycle is already priced in\u201d.<\/p>\n \u201cWhat we will see, assuming the bank does continue to lift the OCR, are more increases in those shorter-term rates.\u201d <\/p>\n BNZ believed that the six-month and one-year rates would be 50 points higher by the end of the year, putting them at 5.25% and 5.3%, and longer-term rates of two years and more would be between 5.5% and 5.9%. <\/p>\n Jones was loath to give a best- or worst-case scenario given all the uncertainty: \u201cIt\u2019s almost like how long is a piece of string at the moment; there are just so many balls in the air.\u201d<\/p>\n The unknowns were US President Donald Trump, the New Zealand election, the state of the domestic economy and the impact of El Ni\u00f1o on the primary sector. <\/p>\n Jeremy Andrews, director of Key Mortgages, is advising his clients to fix for two years. While the six-month rate was around 0.5 percentage points cheaper, at around 4.5%, the extra cost was a small price to pay for the security, he said. <\/p>\n \u201cIf you want to go even longer, like for three years, you have to pay another 0.3 percentage points for that extra year. That\u2019s why we suggest two years as a good option.\u201d<\/p>\n Fixing for five years could backfire if rates did fall in a year or two, he said. <\/p>\n His advice was not to panic \u2013 but not to dither either: \u201cI think it\u2019s only a matter of time before banks do increase those fixed rates again.\u201d<\/p>\n The 4.99% two-year rate would not be around for long, he said. <\/p>\n He added that people should explore whether breaking their current term<\/a> was a good option; in the majority of cases it worked in people\u2019s favour to refix, he said. <\/p>\n![\"These](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/07\/ae641fc5d4ceb36a347e03ca536568ed.jpg\")
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