Interest rates on the move again.

Just when it looked like interest rates were heading in one direction, the picture has changed again.

After a period of falling rates, the Reserve Bank of New Zealand (RBNZ) increased the Official Cash Rate (OCR) from 2.25% to 2.50% in July, its first increase in three years.

For homeowners and prospective buyers, it is a useful reminder that interest rates do not always move in a straight line. More importantly, it highlights why having the right mortgage structure can matter just as much as securing a competitive rate.

Why have rates changed direction?

For much of the past two years, inflation had been easing from its post-pandemic highs. That gave the RBNZ room to progressively lower the OCR, providing some welcome relief for borrowers and helping confidence return to the economy.

Then the landscape changed.

Conflict in the Middle East disrupted global oil supplies and pushed fuel prices higher. Those costs flowed through freight, transport and other goods and services, contributing to another lift in inflation here in New Zealand.

Annual inflation reached 4.1% in the June quarter, putting it above the RBNZ's 1% to 3% target range.

Although oil prices have since eased from their peaks, the RBNZ remains concerned that higher costs could become embedded in other prices and wages. Its July decision to increase the OCR was intended to help bring inflation back under control.

Where rates go from here will depend on how inflation and the wider economy develop. For borrowers, trying to predict every move is probably less important than making sure your mortgage is set up to handle different scenarios.

What does this mean if you have a mortgage?

When rates are changing, it can be tempting to focus on one question: What is the lowest rate I can get?

Rates matter, but it's only part of the equation.

The way your lending is structured can have a significant impact on your repayments, flexibility and how quickly you can reduce debt.

Depending on your circumstances, that could mean considering whether to fix for a shorter or longer period, splitting your mortgage across different fixed terms, keeping part of your lending floating, or using an offset or revolving credit facility where appropriate.

There is no single structure that is right for everyone.

Someone planning to sell or renovate in the next couple of years may need different flexibility from someone focused on aggressively paying down their mortgage. Likewise, a first-home buyer, property investor and family refinancing an existing loan may all have very different priorities.

That is where good mortgage advice can help.

Do not wait until your fixed rate expires

If part or all of your mortgage is approaching the end of a fixed term, it can be worthwhile starting the conversation early.

Rather than simply accepting the rate offered by your existing bank, it is an opportunity to review your overall lending. Your circumstances may have changed since the loan was originally arranged, and the lending market may have changed too.

A Lifetime mortgage adviser can help you understand the options available, compare lenders and consider how different structures could work for your goals and household budget.

Sometimes the right answer will be to stay exactly where you are. Other times, restructuring or refinancing could provide a better fit.

Thinking about buying, refinancing or restructuring?

Changing interest rates do not only matter for existing mortgage holders.

If you are thinking about buying your first or next home, investing in property, refinancing or making a significant change to your lending, understanding your borrowing position early can make the process much easier.

Our mortgage advisers work across the lending market and can help you understand how much you may be able to borrow, navigate lender requirements, compare available options and structure your lending in a way that works for you.

Because a mortgage is rarely just about getting a loan approved. It is about making sure that loan fits into the bigger picture of your life and finances.

Interest rates will continue to move. The important thing is making sure your mortgage is ready to move with them.

Want to review your mortgage?

Whether your fixed term is coming up, you are considering refinancing, or you are planning your next property move, talk to a Lifetime mortgage adviser. We can help you understand your options and make an informed decision about what comes next.