Home owners back to favouring floating rates in big numbers
Despite cajoling from advisers and economists that the past couple of months have been the time to fix at low long-term rates – down to 4.75% for three years – home owners have been ignoring that advice.
Friday, January 23rd 2026, 9:25AM
Nearly half the mortgages taken out in November were on floating rates.
Reserve Bank data for New Lending Fully Secured by Residential Mortgage shows of the $7.9 billion lent in residential mortgages, $3.9 billion, or 49.4%, was on floating rates.
This was a much bigger shift to floating rates than in October and mirrored what happened at the end of 2024 when 47.4% of mortgage money was on floating rates, with home owners banking on the Reserve Bank cutting the OCR and long-term rates coming down.
They followed the same logic at the end of last year.
However, after the Reserve Bank cut the OCR in November to 2.25%, it also indicated it was finished with easing. The financial markets reacted immediately and wholesale rates rose, while banks started pushing up their mortgage rates slightly, including floating rates.
This is expected to weigh on those home owners who will be refixing their mortgages this year – do they stay on floating rates or fix?
The cheap long-term rates have already been and gone and three-year mortgages are now over 5%.
There is little likelihood of further OCR cuts although Reserve Bank governor Anna Breman says the financial markets have become too aggressive in pricing in further cuts, or alternatively, in reacting with potential hikes, and market conditions have tightened beyond the central bank’s projections.
She has indicated that if economic conditions evolve as expected, the OCR is likely to remain at its current level for some time.
In the November lending figures the share of total new residential lending on fixed interest rate terms dropped to 50.6%, down 13% from October.
Investors were by far the biggest group at 53.4% in taking out mortgages on floating rates. Of the $2.28 billon borrowed by investors, $1.22 billion was on floating rates.
This also mirrored what happened at the end of 2024 when 50.8% of investors had mortgages on floating rates. Since the data series began it is only the first and second times this has occurred.
The share of lending to investors declined for one-year fixed terms accounting for 21.6% of new lending, down 10.2% from October.
During the month 95.4% of all investor lending was on floating or fixed two-year terms.
For owner-occupiers, 47.4%, or $2.6 billion of the $5.49 billion in total they borrowed in mortgages was on floating rates, up from 33.3% in October.
Also popular was the one -year fixed term with 22.6% or $1.24 billion being taken out.
The total share of owner-occupier loans on floating and short-term fixed rates of one-year accounted for 79.3% of new lending.
The share of two-year fixed terms remained the same as in October at 10.6%.
One interesting aside is the lowly amount taken out in five-year terms by owner-occupiers – just $75 million or 1.4% – when some economists were saying it was as good a deal as home owners could hope to get. It was, however, the highest share since November 2023.
Within commercial property lending, investment property mortgage lending rose by $110 million, or 15.2% to $835 million; commercial property development lending dropped by 68.8% to $54 million; and residential property development lending increased by 16.7% to $140 million in November.
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