The OCR and mortgage rates: how the cash rate flows to your loan

The Official Cash Rate (OCR) is the interest rate the Reserve Bank of New Zealand sets as its main tool for steering interest rates across the economy. It is 2.75%: the Reserve Bank raised it from 2.50% on 2 September 2026 and held it on 28 October 2026 by a 4 to 3 vote. The next decision is reported for 9 December 2026. Floating mortgage rates tend to follow the OCR closely; fixed rates move more on what markets expect the OCR to do next. As at 10 November 2026, average advertised rates were 6.31% floating and 5.06% for one-year fixed. We do not forecast rates; this guide explains the mechanics.

What the OCR is

ANZ’s explainer describes the OCR as the interest rate the Reserve Bank of New Zealand sets for overnight lending between banks. Changing it changes what banks pay for short-term money, and that flows through to the rates they charge borrowers and pay savers. The Reserve Bank uses it to keep inflation within its target: raising the OCR to cool spending, lowering it to encourage spending.

The OCR is reviewed seven times a year (ANZ), and any review can change it. The next one is reported to come with a full Monetary Policy Statement.

The OCR is not a mortgage rate. Nobody borrows for a home at 2.75%. Banks add their other funding costs, their costs of running the bank, the cost of the capital they must hold, and their margin. That is why mortgage rates sit well above the OCR: as at 10 November 2026, the average advertised floating rate (6.31%) was 3.56 percentage points above it.

The latest decisions

A note on sources: the Reserve Bank’s website blocked our automated access, so these facts come from news reports of its announcements (The Spinoff and Newsquawk for the October hold, interest.co.nz for the September rise). The December date comes from search results for the Reserve Bank’s event page, which we could not open. Check rbnz.govt.nz for the confirmed schedule.

Our mortgage rates page shows the OCR alongside the dated table of advertised rates, and we update both after each decision.

How the OCR flows to floating rates

Floating rates are the most direct link. ANZ says that when the OCR rises, banks’ funding costs climb and “floating interest rates for customers tend to rise”; cuts can push them down. Each bank decides whether, when and by how much to change its floating rate. It is not obliged to pass on the full change, or any of it, and the size of the move can differ from bank to bank.

Here is what a 0.25 point move would mean on a $500,000 floating loan over 30 years, starting from the average floating rate as at 10 November 2026. This is an illustration of the mechanics, not a prediction that rates will move either way:

As a rough rule from these figures, each 0.25 points on a floating rate moves the repayment on a 30-year loan by about $16 a month per $100,000 borrowed. Floating interest is charged daily, so a rate change shows up in the interest you are charged from the day it takes effect, and banks then reset your repayment (see how banks calculate interest).

How the OCR flows to fixed rates

Fixed rates work differently. When a bank fixes your rate for two years, it needs funding for two years, and the price of that funding depends on where the market thinks short-term rates will be over the whole period, not just today. ANZ puts it this way: “it’s often changing expectations about future OCR decisions that cause fixed mortgage rates to go up or down.”

That has three practical effects:

• Fixed rates can move before the OCR does. If markets come to expect a rise, wholesale rates and then fixed rates can climb weeks or months ahead of the announcement. By the time the OCR moves, it may already be “priced in”.
• Fixed rates can move the opposite way to the OCR. A rise that signals the end of rises can see longer fixed rates ease. A surprise, like October’s hold when a rise was expected, can move wholesale rates on the day.
• Longer terms respond to more than the OCR. ANZ says expectations matter most for terms out to about two years, and that beyond about three years global factors matter more, because banks also borrow from large international institutions at wholesale rates.

The same wholesale rates drive break fees. BNZ, for example, bases its early repayment charge on whether wholesale rates have fallen since your fixed term began. See our guide to break fees.

When a change reaches your repayments

How quickly an OCR move reaches you depends on your loan:

• Floating and revolving credit: as soon as your bank changes its floating rate. Interest is charged daily, so the new rate applies from the day it takes effect.
• Fixed: not until your fixed term ends. Until then your rate is locked, whatever the OCR does. You feel the change at your next refix, through whatever fixed rates are on offer then.
• Split loans: in stages, as each part reaches its refix date.

For a fixed loan, here is what a 0.25 point difference in the one-year rate would mean at refix on $500,000 over 30 years, again as an illustration only:

That is about $76 to $77 a month either way. Because fixed loans only reprice when they come up for refixing, an OCR change takes time to reach borrowers on fixed rates, and reaches them at different times.

Where advertised rates sit now

Average advertised rates across ANZ, ASB, BNZ, Kiwibank and Westpac, using each bank’s lowest rate for the term, as at 10 November 2026, and the monthly repayment on a $500,000 loan over 30 years at each:

Most fixed specials need at least 20% equity. The rates come from one source, the interest.co.nz table, read on 10 November 2026; see our mortgage rates page for each bank’s figures and notes. The shape, with short fixed terms cheapest and floating dearest, reflects banks’ pricing and the market’s expectations at that date. It is not a signal of where rates will go.

What it means for your decisions

We do not forecast the OCR or mortgage rates, and we would be wary of anyone who claims to know. What you can do is plan for a range:

• Test your budget at a higher rate. Put a rate one or two points higher into our repayment calculator and check you could manage.
• Understand what you are buying when you fix. A fixed rate buys certainty for the term, at the cost of flexibility. Our fixed vs floating guide covers the trade-off.
• Spread your timing. Splitting your loan across terms means not all of it refixes at once. See split loans and how to refix.
• Watch announcement dates if a fixed term is ending soon, since wholesale rates can move on the day.

This is general information, not financial advice. Rates as at 10 November 2026.

Questions people ask

What is the OCR now?

The Official Cash Rate is 2.75%. The Reserve Bank raised it from 2.50% on 2 September 2026 and held it at 2.75% on 28 October 2026, by a 4 to 3 vote.

When is the next OCR decision?

It is reported for Wednesday 9 December 2026 at 2pm, with a Monetary Policy Statement. We could not confirm this on the Reserve Bank’s own site, so check rbnz.govt.nz.

If the OCR goes up 0.25%, do mortgage rates go up 0.25%?

Not necessarily. Floating rates tend to follow the OCR, but each bank decides how much of a change to pass on. Fixed rates may already have moved in anticipation, or may move by more or less.

Why are fixed rates lower than floating rates?

Fixed rates are priced on wholesale rates for the term, which reflect where markets expect the OCR to go, plus competition between banks for fixed lending. As at 10 November 2026 the average one-year fixed rate was 5.06% and floating 6.31%.