Higher Rates and Slower Housing Recovery Forecast for New Zealand Borrowers

New Zealand borrowers face higher interest rates and a slower housing recovery than previously forecast, according to the Pre-election Economic and Fiscal Update (PREFU) released by the Treasury.

The update shows that 90-day interest rates are expected to peak at around 3.8% by mid-2029, up from the previous forecast of 3.3%. Long-term wholesale rates have reached multi-decade highs, pushing up borrowing costs across the economy.

Markets now price the official cash rate (OCR) at around 3.9% by October 2027, up from 3.5% in the previous forecasts.