NZ Mortgage Rates Poised for Further Hikes Amidst Global Inflation Fears

New Zealand mortgage brokers are bracing themselves for higher fixed-term rates and more frequent official cash rate hikes as global inflation fears rise following an oil shock in the Middle East. The US-Iran tensions have pushed Brent crude to a high of $110 per barrel, causing bond yields to surge globally.

According to Westpac, two-to-five-year fixed mortgage rates have already risen above 5%. Economists at three major banks - ASB, ANZ, and Kiwibank - predict further OCR increases in the coming months. ASB expects an RBNZ hike in October, while ANZ warns that the tightening cycle may extend beyond 3%.

Despite the global economic volatility, New Zealand's economy has held up better than expected. Westpac upgrades its GDP forecast for the June quarter to a 0.2% rise, while ASB and ANZ predict smaller increases of 0.1%. Kiwibank's economics team remains cautiously optimistic, citing business sales and profits that rose by 8.9% and 7.9%, respectively.