Big move back to two-year fixed interest rates
Two-year fixed interest rates surged back into popularity with home owners taking out new mortgages in December.
Wednesday, February 11th 2026, 10:31AM
by Sally Lindsay
Owner occupier lending moved towards longer terms, with the share of new lending on two-year fixed terms increasing by 12.7% from 10.6% in November to 23.2%.
The RBNZ’s New Lending Fully Secured by Residential Mortgage data shows mortgages taken out on fixed interest rates rose to 78.2%, up 27.6% from November.
The big move was in the two-year fixed rate at the expense of floating rates, which dropped to 20.6% from 47.4% the previous month.
Owner-occupiers took out $2.15 billion in mortgages on two-year fixed terms, or 23.2%, up from 10.6% in November – the highest since April last year.
The two-year fixed rate has long been a staple in the mortgage market but had been abandoned in favour of floating rates since the RBNZ started cutting the OCR in 2024.
In November floating rates had surged up to 47.4% for owner occupier lending and 49.4% for investors as they anticipated another OCR cut.
The RBNZ took the OCR down to 2.25% but indicated it had probably reached the bottom of the easing cycle. The financial markets didn’t react kindly and wholesale interest rates rose immediately pushing mortgage interest rates up.
The big switch to fixed rates in December also coincided with the major banks offering 1.5% cashbacks on new mortgages and there was a huge flurry of borrowers changing to new lenders.
As a result, total monthly new lending increased to $13.1 billion, up from $7.9 billion in November –a new series high from the previous high of $9.2 billion in July 2021, at the peak of the pandemic buying frenzy. Compared to December 2024, total monthly new lending was up 47.3% from $8.9 billion.
New owner occupier lending increased to $9.3 billion in December, up from $5.5 billion in November.
The share of owner occupier loans on floating and short-term fixed rates, up to one year represented 50.1% of new lending.
Terms up to 18-months fixed accounted for a combined share of 49.9%.
New lending on a three-year fixed term accounted for 11.8% of all new lending, up from 3.3% the previous month, while lending on one-year fixed terms dropped from a 22.6% share in November to 21.9% in December.
New investor mortgage lending rose to $3.6 billion in December from $2.3 billion in November.
Floating terms accounted for 23.2%, down 30.2% from 53.4%.
During the month 82.2% of investor new lending was on floating or at fixed rates of two-years.
The share on floating and six-month fixed terms dropped during December, with one-year fixed terms accounting for 21.9% of new lending, up 0.2% from 21.7% in November.
Two-year fixed terms increased to a 20.5% share, up 12.8% from 7.7% in November.
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