Market Update 13 October 2026: Rixed Mortgage Rates Move: What Swap Rates Are Telling Us
Giving you exclusive insights into the New Zealand property market and keeping you updated with the latest in property investment concepts.
When a bank changes its fixed home loan rates, the headline is usually about the rates themselves. The more useful question is why they moved.
ASB's latest update is a good example.
It lowered some fixed rates, raised others and left a couple unchanged. On the surface, that can look inconsistent. Underneath, it reflects a few forces that every borrower and investor should understand, starting with swap rates.
What ASB Changed
ASB's lowest advertised fixed rates for borrowers with more than 20% equity now sit as follows:
Term | ASB rate | Change |
6 months | 4.79% | Unchanged |
1 year | 4.99% | Unchanged |
18 months | 5.29% | Down 0.06 |
2 years | 5.35% | Down 0.10 |
3 years | 5.59% | Up 0.14 |
4 years | 5.65% | Up 0.16 |
5 years | 5.757% | Up 0.16 |
So shorter terms came down or held, while longer terms went up. This brings us on to swap rates.
What Are Swap Rates?
A swap rate is a wholesale market price that reflects where the market expects interest rates to go over a given period. There is a different swap rate for each term: a two-year swap rate reflects the market's view of the next two years, and a five-year swap rate reflects its view of the next five.
Swap rates matter for mortgages because they are a core building block of what it costs a bank to offer you a fixed rate for that same term. In simplified terms, a bank's fixed rate is built from:
The swap rate for the matching term
Funding costs on top of that, including the bank's credit spread and what it pays for deposits
The bank's margin
The Reserve Bank has described mortgage pricing as a mark-up over a bank's marginal funding cost, and it looks at swap rates, wholesale credit spreads and term deposit rates as the main inputs.
This is also why fixed rates and the Official Cash Rate (OCR) don't always move in step. The OCR sets the cost of very short-term money. Fixed mortgage rates for longer terms follow the swap rate for that term, which reflects where the market thinks rates are heading rather than where they are today.
What Has Been Happening
Interest.co.nz reports that wholesale swap rates jumped in early September. Since then, the moves at the short end haven't been significant, so banks haven't needed to lift those rates further.
Two other things are worth knowing:
Competition is intense. Lending volumes are lower than expected, so banks are competing hard for a limited pool of borrowers. That limits how far any one bank can push rates up, and it helps explain why ASB's update brings its rate card into line with rivals rather than leading the market.
Not every lender prices the same way. Challenger banks, particularly the Chinese-owned ones, can still offer lower rates. And smaller banks like SBS and TSB are less exposed to swap rate moves, because their home loan pricing depends more on what they pay for deposits.
Markets are also pricing a 60% chance of an OCR hike on 28 October.
What This Means in Practice
Longer fixes currently cost more. ASB's 5-year rate is 0.40% above its 2-year rate. A longer term buys certainty, and right now it comes at a price. Whether that is worth paying depends on your cash flow, your other debts and how long you plan to hold the property.
The difference between lenders can be decent. 2-year rates from NZ-registered banks sit in a fairly tight range of roughly 5.29% to 5.49%. The challenger banks listed are lower, between 4.64% and 5.08%. Eligibility and conditions can differ between lenders, so it pays to check the detail before assuming a lower number is available to you.
Small differences add up. As an illustration, on a $600,000 loan over 30 years, the monthly principal-and-interest repayment at 5.35% is around $3,350. At 5.75% it is around $3,500. That's about $150 a month, or $1,800 a year, from a 0.40% difference.
Break fees tend to be low when rates are rising. The logic is simple: a break fee generally reflects how far market rates have fallen below your fixed rate. If market rates are rising, there is less cost to a lender when you leave early. Check the terms of your own loan before relying on this.
Swap rates tend to move first. Rate cards usually follow wholesale moves, not the other way around. Watching wholesale rates, rather than waiting for a bank announcement, can give you a head start on where fixed rates are heading.
How to Use This
Understanding what drives rates doesn't mean predicting them. Nobody can reliably do that. What it does is help you plan with open eyes instead of reacting to each change.
Two tools make it easier to put your own numbers against the market:
Test different rates and terms against your own loan, including interest-only and principal-and-interest.
And if you'd like to talk through how rates fit into your wider investment strategy, get in touch with our team.
How Can We Help You?
We help Kiwis build wealth through property investment. Our advisors will take the time to understand your individual needs and recommend suitable investment properties to help you build wealth and set up your retirement.
What Does This Look Like?
We use a 3-step process:
We start with a Discovery Meeting where we learn about you, your goals, etc., and you learn more about us.
This is followed by a Strategy Meeting where we model your retirement plan, understand key investment concepts, and briefly touch on some investment choices.
Finally, an Asset Selection Meeting where we discuss investment options in more detail and make any recommended adjustments based on what we now know about you.
Who Are We Right For?
We help people make smart investment choices and set up their futures. From first-time investors to experienced investors, we can cater to a wide range of people and help set up their futures through research-based property investment.
How Much Does It Cost?
Our advice is free to you! If you choose to invest, we’re paid by the property developer. This developer-paid model allows us to provide no-obligation property investment advice in New Zealand, without charging clients directly.
What Do We Do, And What Don't We Do?
What We Do
We offer end-to-end New Zealand property investment advice, helping Kiwi investors grow wealth through smart, data-led decisions. Our focus is on quality new builds in strong locations, tailored to your goals, guided by a team that knows the NZ market inside out. What We Don’t Do
We don’t do KiwiSaver, shares, cryptocurrency, or broad financial planning. Thrive is not a generalist firm. We specialise in property investment in New Zealand because that’s where we deliver the most value. By staying focused, we cut through the noise and help our clients make confident, well-informed property investment decisions.
How Do I Start?
Start the process now by booking a time to talk with our advisor here.
