Over the past few weeks, global economic uncertainty has increased again due to geopolitical tensions, rising energy prices, and inflation pressures.

Many homeowners in New Zealand have recently been asking an important question:

“If the Official Cash Rate (OCR) hasn’t moved, why are some fixed mortgage rates and swap rates starting to increase again?”

The answer lies in how global financial markets work and how banks price home loans in New Zealand.

In this article, we break down what economists are saying, why mortgage rates are shifting again, and what homeowners should consider when refixing or refinancing their home loan in NZ.

The Global Economy Is Becoming More Uncertain

One of the biggest drivers of interest rate movements is global economic stability.

Recently, geopolitical tensions and conflicts around the world have started to influence financial markets again. Rising tensions in the Middle East have pushed global energy prices significantly higher, which creates inflation pressure across many economies.

When energy prices increase, the cost of:

• Fuel
  
• Transport
  
• Manufacturing
  
• Logistics
  

also rises.

These increases eventually flow through to consumer prices.

For example, airlines have already begun increasing fares due to higher fuel costs, demonstrating how quickly global shocks can affect everyday living expenses.

When inflation risks rise globally, financial markets react immediately.

Why Swap Rates Are Increasing Again

Many borrowers focus only on the Official Cash Rate, but mortgage pricing in New Zealand is strongly influenced by wholesale swap rates.

Swap rates reflect what financial markets believe future interest rates will look like.

Right now, global investors are concerned about:

• Rising energy prices
• Geopolitical instability
• Inflation potentially returning
• Governments running large deficits
  

When investors believe inflation may return, longer-term interest rates tend to increase.

This is why some banks have recently started adjusting fixed mortgage rates, even though the OCR has not moved.

What Economists Are Saying About NZ Interest Rates

Economists currently have a mixed outlook on interest rates in New Zealand.

Some of the key insights from recent forecasts include:

• Inflation in New Zealand remains slightly above the Reserve Bank’s target at around 3.1%
• Inflation is expected to gradually move toward the 2% midpoint during 2026
• The OCR is expected to remain relatively stable through most of 2026
  

However, economists also believe the next move after that could eventually be upward, depending on inflation trends.

Some forecasts suggest mortgage rates may gradually move toward around 5% over the next 12 months, even if the OCR remains stable.

This is largely due to movements in global funding markets rather than domestic monetary policy alone.

Why Mortgage Rates May Not Fall Much Further

Several structural factors are preventing mortgage rates from falling significantly.

1. Global Inflation Risks

Geopolitical tensions, supply chain disruptions, and rising energy prices all create potential inflation pressures.

2. Rising Government Debt Worldwide

Many governments are borrowing heavily, which increases demand for capital and pushes global interest rates higher.

3. Financial Market Expectations

Markets generally expect interest rate cycles to move upward again once economic growth strengthens.

Because of these factors, many economists believe we are entering a plateau phase for mortgage rates rather than a steep decline.

ASB economists recently described the current environment as “watching and waiting nervously for offshore risks.”