Recent data suggests the low interest rate window of 2024–2025 is beginning to close. While short-term mortgage rates (six months to two years) have remained relatively stable, longer-term fixed rates have started to rise, particularly in the three- to five-year range. Five-year mortgage rates that were commonly available at around 4.99% late last year are now closer to 5.2–5.6%, signalling that the market has likely passed its lowest point.
This shift is being driven less by retail deposit rates and more by movements in swap rates, which reflect banks’ funding costs. Since November, swap rates — especially the five-year swap — have risen sharply following a more hawkish tone from the Reserve Bank around inflation risks. While this does not suggest a return to the very high interest rates seen in previous cycles, it does indicate that rates are now more likely to rise than fall over the medium term.
Another notable change is that bank “hidden discounts” have largely disappeared on fixed rates, with most remaining negotiation now occurring on floating rates. Looking ahead, the next key signal will come from the Reserve Bank’s February policy update, which will shape expectations around OCR settings and future interest rate movements. For borrowers and investors, the environment is shifting from one of falling rates to one that rewards careful structure and timing rather than waiting for further cuts.
What This Means for Auckland Investors
The interest rate environment is shifting. After a prolonged period of falling rates through 2024 and 2025, longer-term mortgage rates are now edging higher, suggesting the market has likely passed its lowest point. While short-term rates remain relatively stable, investors should not assume further broad-based rate cuts from here.
For Auckland investors, this reinforces the importance of structure and cashflow resilience. With pricing stabilising rather than accelerating, returns will be driven less by rate tailwinds and more by asset quality, tenant demand, and financing strategy. The window for locking in very low long-term fixed rates has narrowed, and negotiating discounts on fixed rates has become harder.
Looking ahead, interest rates are more likely to plateau or rise modestly rather than fall sharply. Investors should plan on conservative assumptions, review debt structures carefully, and focus on properties with strong underlying rental demand — particularly in well-located Auckland suburbs where vacancy risk remains low.
