Aaron's 2026 Interest Rate Predictions for NZ Homeowners
From Aaron’s YouTube: “My Interest rate predictions for 2026”
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Posted 18 December 2025
The short version
- Aaron predicts mortgage rates will likely stay flat through 2026 despite recent bank increases.
- Banks raising rates recently may be reacting to Reserve Bank messaging rather than economic fundamentals.
- Rates typically rise to slow the economy or fall to stimulate it - neither seems needed right now.
- While one-year fixed rates may stay steady, longer-term rates could still fluctuate.
Why rates might stay put
Despite some banks recently increasing their mortgage rates, Aaron believes we could see rates stabilise through 2026. He notes this recent hike came after all major banks had already moved, suggesting it might be more about following Reserve Bank signals than economic necessity.
The key factor is New Zealand's economic recovery. Aaron explains that interest rate movements generally respond to whether we need to slow down or stimulate the economy. Right now, with recovery still incomplete, conditions don't clearly call for either higher or lower rates.
What 'flat rates' really means
When Aaron talks about rates staying flat, he's specifically referring to the popular one-year fixed mortgage terms. These shorter-term rates tend to be the most responsive to current economic conditions and what most homeowners watch most closely.
However, he cautions that longer-term fixed rates (like three or five-year terms) could still see some movement. These are influenced by different factors, including international markets and banks' long-term funding costs.
What this means for your mortgage
If you're coming up to refix your mortgage in 2026, Aaron's prediction suggests you might not need to rush to lock in a rate. But he'd still recommend watching the market closely and having a chat well before your refix date.
The stability in one-year rates could make budgeting easier, but it's also a reminder to consider how different loan structures might fit your situation. Sometimes locking in for longer - or using different tools like offset accounts - can make sense even when rates aren't moving much.
This is general information, not personalised financial advice. For advice on your situation, talk to Aaron.
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