1. When will the OCR move?
Wednesday’s a big for homeowners and the economy: the Reserve Bank will, at 2pm, make its first OCR decision for the year. The committee will more than likely keep the cash rate at 2.25%, but that doesn’t mean the meeting will be a non-event for a lot of reasons, including the fact it’s the first OCR decision of the new governor, Anna Breman, which means there’ll be a lot of focus on her choice of words and general communication style – financial markets and economists certainly love poring over every word in statements like this to try and find any hidden or subtle new meanings.
Clearly, there’ll be a lot of focus, too, on the economic forecasts, including GDP, employment, house prices, and inflation. But perhaps most attention will be on the OCR projection itself; will there be any changes? Could the first increase for the next cycle come later in 2026 rather than early 2027? Or will the Reserve Bank stick to its forecasts, which would indicate it thinks the financial markets have got ahead of themselves in anticipating an early OCR rise? Regardless of the exact timing, the most likely path for the OCR from here is upwards.
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2. Floating loans fall off a cliff
Speaking of interest rates, we’ve come off the big floating high of November – as anyone settling a deal around that time bought some flexibility while they awaited the OCR decision at the end of that month – and fixed in huge numbers in December. Indeed, after November’s OCR announcement and the clear signal that no further cuts would be made, only 22% of loans in December were floating (compared to 49% in November), with fixed-term rates of at least one year surging from 19% to 49%. The biggest shift was towards the two- and three-year fixed terms. There’s a pretty clear sign that the likely mass move by borrowers towards fixing again has begun.
Cotality chief economist Kelvin Davidson: "These figures clearly aren’t great for sellers, but they’re not a disaster either." Photo / Peter Meecham
3. More pain and less gain for property resellers
The Cotality Pain & Gain Report is out, analysing the gross profits and losses of properties that sold in the last three months of 2025. It showed that around 88% of resales in the fourth quarter scored a gross profit (the median gain nationwide was $298,000). That means 12% of resales lost money (the median loss nationwide was $55,000). These figures clearly aren’t great for sellers, but they’re not a disaster either. After all, most sellers still clear quite a bit of equity and on most occasions (albeit owner-occupiers will just need to plough it back into the next deal).
The amount of time you hold on to your property before you sell is key, with the median hold period for profit-making properties around 10 years, while the median hold period for loss-making properties was about four years. Given that property values nationwide are around 18% below where they were four years ago, it’s been a tough time to have bought and sold in that time period. Most people wouldn’t have intended to do that, but unfortunately, circumstances change.
4. Migration now seems to be slowly lifting
Last week’s figures showed a continued gentle rise in the net migration inflow to NZ, albeit from a low base – as non-citizen arrivals lift a bit, and citizen departures ease. That will comfort some landlords, who have recently been facing flat to falling rents.
5. Keeping an eye on inflation
On that note, we’ll get Stats NZ’s latest figures on property rents as part of the selected price indexes release on Tuesday this week. I’d expect them to stay pretty weak, but this will be a release to keep an eye on, given the lingering concerns around inflation pressure in the economy.
- Kelvin Davidson is chief economist at property insights firm Cotality
