Mortgage holders still hedging their bets

Floating and short-term interest rates for mortgages gained traction again in September before the RBNZ’s big 0.50% OCR cut in October.

Friday, November 7th 2025, 9:28AM

by Sally Lindsay

With another 0.25% OCR cut this month already baked in by the financial markets, most mortgage holders are expected to start moving to longer-term rates after that.

The ANZ, the country’s biggest home lender, has warned that mortgage holders have only months not quarters to make the switch to longer terms as the bottom of the mortgage cycle is near, with rates on track to bottom out late this year or early next year.

It says the window for fixing longer term rates could close rapidly if economic data starts to improve.

The RBNZ’s September data shows total monthly new residential lending dropped to $7.9 billion from $8.2 billion in August but was up 21.5% from $6.5 billion in the same month last year.

Over the month the share of new lending on fixed interest rate terms declined to 71.9%, down 1.5% from August.

Owner-occupiers took out $5.4 billion in mortgages and of that 26.8% ($1.462 billion) was on floating rates, up from 25% in August.

The total share of owner occupier loans on floating and short-term fixed rates up to one year represented 77% percent of new lending.

Earlier this year, when mortgage holders were eagerly waiting for interest rates to come down, there was a big surge to the floating rate option, with about 40% of mortgages taken out at that level.

Just over 12% ($658 million) was on fixed six-month terms in September, up from just 6.2% the previous month.

As has been the case for about half the year, the most popular term for owner-occupiers has been the one-year fixed rate and in September 38.1% (just over $2 billion) of mortgages were fixed at that rate, down from 39.3% in August.

Terms of 18-months fixed accounted for a combined share of 23%, while two-year terms accounted for 12.6% of all new lending, up from 11.8% percent the previous month.

Data for investors shows a similar story.

Of the $2.3 billion in new lending during September, nearly 96% was on floating or fixed terms of less than two years.

The one-year rate is the most popular, although it declined to 38.9% from 41.2% in August.

Investors taking out mortgages on floating rates rose just slightly to 29.6% from 29% the previous month. However, they took a shine to the six-month rate, with their share rising to 14.7% from 6.8% in August.

Within commercial property lending, investment property increased by $545 million (60.1%) to $1.5 billiion; commercial property development increased by 58.6% to $176 million; and residential property development dropped by 32.8% to $80 million.

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