03/09/2026
Does the OCR control all mortgage rates?
Myth: When the Reserve Bank changes the Official Cash Rate (OCR), every single mortgage rate goes up or down by the exact same amount.
Fact: The OCR mostly controls short-term rates, but long-term rates are influenced by something called swap rates.
Short-Term Rates (Floating & 1-Year Fixed)
Think of the OCR as the wholesale price banks pay to borrow cash overnight.
If the OCR goes up, floating and 1-year rates usually go up in anticipation or after because it gets more expensive for banks to lend you money today.
Long-Term Rates (3 to 5-Year Fixed):
Global Influence: Banks fund long-term fixed loans by borrowing from global financial markets. What happens to interest rates in the US or Europe matters more to a 5-year rate than what our Reserve Bank does.
Long Game: A 5-year rate is an average guess of where the economy will be half a decade from now. A quick change to the OCR today usually gets smoothed out over that long period.
Already Baked In: Markets constantly look ahead. By the time the OCR actually changes, the long-term rates have usually already adjusted months in advance.
Regardless of the OCR, we still believe the best approach is to have the right structure in place for your situation. DM us.
