NZ interest rates
The NZ floating mortgage rate against the OCR
How New Zealand's floating mortgage rate tracks the Official Cash Rate, why the gap between them moves, and what new-customer pricing does and does not show.
New Zealand borrowers watch two numbers: the Official Cash Rate the Reserve Bank sets, and the floating mortgage rate their bank advertises. The two move together, but they are not the same series and they do not move in lockstep. This note explains how the floating rate relates to the OCR, why the gap between them is itself a variable, and what the published series does and does not tell a borrower.
Two different series
The OCR is the rate the Reserve Bank pays and charges on overnight settlement balances. It is a policy instrument and a decision series: it changes only on scheduled decision dates. The floating mortgage rate is a commercial price set by each lender. The republished RBNZ series tracks the advertised floating first-mortgage housing rate for new customers, with a latest observation of 6.07% on 31 July 2026 drawn from 750 observations. The OCR series records 78 decisions, with its latest level 2.50% taking effect on 25 August 2026.
The two are not directly comparable at a point in time, because their latest observations fall on different dates and the OCR is a policy anchor rather than a retail price. What matters is the relationship: the floating rate sits above the OCR by a margin that reflects the lender's funding mix, operating costs, capital requirements and credit risk.
How the floating rate tracks the OCR
A floating mortgage is priced off short-term funding, and short-term funding clusters around the OCR, so when the Reserve Bank moves the cash rate the market rates underlying a floating book move almost immediately. The advertised floating rate typically follows within days or weeks, though the pass-through need not be the full move, and lenders can reprice for their own reasons at any time.
That is why the two lines in the desk's charts do not sit a fixed distance apart. The OCR is a step function that jumps on decision dates; the floating rate is a commercial series that drifts, catching up after a decision and sometimes moving without one. Over the long history the OCR has ranged from a low of 0.25% on 17 March 2020 to a high of 8.25% on 26 July 2007, having been introduced at 4.50% on 17 March 1999. The floating series stretches back further still, and the size of the gap between the two has varied across those eras.
Basis risk: when the gap moves
Basis risk is the risk that the spread between the floating rate and the OCR changes. It is real for a borrower, because the interest bill depends on the floating rate, not on the policy rate. If funding costs, competition or capital rules change the margin a lender needs, the floating rate can rise while the OCR holds, or fall while the OCR holds. The policy rate and the retail rate are related, but the relationship is not a contract.
This matters for reading the data. A change in the OCR is a change in the anchor; a change in the floating series is a change in the price. When the two move by different amounts, the difference is the margin, and it has its own causes that the OCR file does not record.
New-customer versus existing-customer pricing
The published floating series is specifically a new-customer rate. Banks often advertise sharp rates to attract new borrowers while existing customers sit on standard or legacy rates that can be higher. The new-customer series is therefore a clean, consistent measure of the front of the market, but it is not a measure of what every borrower pays. A reader comparing their own statement to the series should expect a gap, and should not read that gap as a policy signal.
Where this fits in the wider picture
New Zealand's housing finance is unusually sensitive to short-term rates. A large share of the mortgage book is on floating or short fixed terms, so policy decisions pass into household cash flows faster than in economies dominated by long fixed-rate loans. The floating rate series is where that sensitivity is most visible. That is a structural feature of the market rather than a recent development, and it shapes how quickly any policy change is felt.
It follows that reading the OCR and the floating rate together is more informative than reading either alone. The OCR documents the decision path; the floating series documents the price borrowers actually face. The gap between them is the margin, and its movement is a reminder that monetary policy sets an anchor while lenders set prices. For a reader without a mortgage, the pair also illustrates how a single official number reaches the wider economy: through contracts that reprice at different speeds.
How to read this on Younivi
The NZ OCR page shows the RBNZ decision history, and the floating mortgage page shows the new-customer series with its source citation. Companion notes cover the OCR's own history and how floating and fixed rates respond differently. Figures are republished official data, may lag the producer, and are not financial advice about any borrowing choice.