More than half of New Zealanders believe higher borrowing costs are inevitable, with a net 57% telling ASB’s latest housing confidence survey they expect interest rates to climb over the coming year. According to ASB’s September report, the net 57% result covering the three months to July marks a sharp increase from a net 48% the previous quarter, hitting its highest level since April 2023.
ASB Housing Confidence Survey Shows Growing Rate Expectations
The sentiment shift arrives ahead of the Reserve Bank’s Official Cash Rate review, where ASB tips a second straight rise. According to ASB senior economist Jane Turner, the bank expects the Official Cash Rate to hit 3.25% by the end of the year, representing a total lift of 100 basis points.
“We expect the RBNZ will remain proactive and hike the OCR 25 basis points at each remaining meeting this year,” Turner said, though she noted that risks sat with a slower pace of hikes, “with the potential for the RBNZ opting to pause at some point”, particularly if domestic demand indicators stayed sluggish.
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ASB’s housing confidence poll revealed that 62% of participants anticipated increased borrowing expenses in twelve months, while 14% foresaw stability and 5% predicted a decrease.
Mortgage Rates and Market Impact
Lending markets have already begun adjusting to tighter monetary policy. As outlined in the findings, the typical two-year fixed rate had climbed 41 basis points since January alongside a 21-basis-point increase for the one-year rate. Turner attributed the shift in direction to the late-February Middle East conflict that escalated fuel costs and inflation projections.
With expectations for interest rates becoming more severe, enthusiasm for property values has weakened, leaving just a net 9% of participants anticipating increases over the next twelve months—a dramatic drop from the net 30% peak reached in the summer. Despite the cooling price sentiment, buyers still see opening.
Frequently Asked Questions
What do New Zealanders expect from interest rates?
According to the ASB housing confidence survey, a net 57% of New Zealanders expect borrowing rates to climb over the coming year, up from net 48% the previous quarter.
How much does ASB expect the Official Cash Rate to rise?
ASB expects the OCR to hit 3.25% by the end of the year, a total lift of 100 basis points, with ASB picking further increases at every remaining meeting this year.
How have fixed mortgage rates responded?
Average fixed mortgage rates have risen since January, with the average two-year fixed rate rising 41 basis points and the one-year rate 21 basis points.
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