Why I'm Not Panicking About Mortgage Rates Rising (And What I'm Doing Instead)

My honest answer? No. Not worried. But I am paying attention.

Here's the thing: mortgage rates rising after the OCR has been dropping feels counterintuitive. It catches people off guard. But if you've been investing through a few cycles, you learn that the headline rate and your actual borrowing cost don't always move in lockstep, and panicking about short-term movements is rarely the right response.

So instead of worrying about what I can't control, I'm focusing on what I can. And that's what I want to walk through today.

What's Actually Happening With Rates Right Now

Let's get the facts straight first, because there's been some confusion in the conversations I've been having.

The OCR is sitting at 2.25% and holding steady as of the February 18th announcement. The Reserve Bank has signalled a hold for now, though it's worth noting some economists are forecasting a potential hike later in the year if inflation stays sticky. For now, though, the message is stability.

But here's where it gets interesting: while short-term rates have been stable or even softening slightly, longer-term fixed rates (the 3-year, 4-year, 5-year fixes) have been edging up. Not dramatically, but enough that people are noticing.

Why? Because banks price longer-term fixed rates based on where they think the economy is heading, not just where the OCR is today. And right now, with inflation still sitting at 3.1% (which the Reserve Bank Governor recently called a "significant miss" from targets), banks are pricing in the possibility that we've reached the bottom of this easing cycle. They're building in a cushion for what might come next.

The average mortgage rate is sitting around 5.1% right now. That's the yield across existing loans. You'll see advertised specials lower than that (some banks are offering rates in the 4.4%–4.9% range), but 5.1% reflects what most investors are actually paying across their portfolios. That's not cheap compared to where we were a few years ago, but it's also not the 8-9% stress-test territory we were navigating in 2023.

Why I'm Not Panicking

I've been through enough cycles now to know that reacting emotionally to rate movements is one of the fastest ways to make poor decisions. So here's my mindset going into 2026.

First, I bought for resilience, not for perfect timing.

Every property I own was stress-tested at rates higher than what I'm paying now. That's not because I'm pessimistic. It's because I sleep better at night knowing a 1% or even 2% increase won't break my cashflow.

If a rate rise genuinely threatens your ability to hold a property, that's not a rate problem. That's a purchase problem. And no amount of OCR watching will fix that.

Second, rising rates don't change tenant demand.

This is the part people forget when they're fixated on headlines. Your tenants don't care what your mortgage rate is. They care whether your property meets their needs and whether the rent is fair for the location.

Hamilton's rental market has stayed strong even through the toughest rate environment we've seen in over a decade. The city's population growth (running at about 1.8% annually) continues to outpace the national average, median rent is holding steady around $537 per week, and vacancy rates remain low, especially compared to Auckland or Wellington, which have been notably softer. That underlying demand is what protects your investment, not the OCR.

Third, I'm thinking in years, not months.

A 0.5% shift in your fixed rate over the next 12 months might feel significant today, but over a 10-year hold, it's noise. What matters more is whether you own a property in a suburb with strong fundamentals, whether your tenant profile is stable, and whether your rent can grow over time.

If those three things are in place, short-term rate fluctuations become something you manage, not something you panic about.

What I'm Actually Doing Instead

So if I'm not panicking, what am I doing? Here's my practical game plan for 2026.

I'm locking in certainty where I can.

With longer-term rates ticking up, I'm taking a close look at my refixes over the next six months. For properties with strong cashflow, I'm comfortable locking in a 2-year or 3-year rate now rather than gambling on rates dropping further. Some banks have 3-year specials sitting around 4.99% right now, which gives decent certainty.

That said, if you're confident the September rate hike talk won't materialize, shorter 1-year fixes (currently as low as 4.39%) might offer better value. It's a judgment call based on your risk tolerance and cashflow needs.

What I know for certain: the difference between 5.1% and 4.8% isn't worth the stress of floating or going ultra-short if the market moves against you and you're not prepared for it.

I'm reviewing my buffers.

Every property I own has a cashflow buffer built in, money set aside to cover rate rises, maintenance, or vacancy. But I'm not assuming that buffer from 2023 is still adequate in 2026.

I'm going through each property and asking: if rates go up another 1%, can I still cover it comfortably? If the answer is tight, I'm either topping up the buffer or looking at whether a small rent adjustment is justified when the current tenancy rolls over.

This isn't about squeezing tenants. It's about making sure the numbers work so I can be a stable, long-term landlord.

I'm not letting rate anxiety stop me from buying or building properties.

Here's the honest truth: if I find the right property in the right suburb at the right price, I'm still buying in 2026. Rising rates don't change the fundamentals of a good investment.

What I'm not doing is rushing in just because the OCR dropped or waiting on the sidelines hoping rates will fall another 0.5%. Both of those strategies assume you can time the market perfectly, and you can't.

Instead, I'm buying properties that make sense at today's rates, in suburbs where tenant demand is proven, and with enough margin that I'm not relying on capital gains to bail me out.

I'm staying close to the data.

I'm watching rental demand trends in Hamilton, monitoring how quickly properties are filling, and keeping an eye on what's actually happening with rents in different suburbs. That real-time data tells me far more about the health of my investments than any headline about the OCR.

And right now, the data is telling me that Hamilton's rental market is holding up well. Vacancy risk is low, tenant enquiry is consistent, and rent growth is steady in the right pockets. That's what gives me confidence, not speculation about where rates might be in 12 months.

The Bigger Picture

Rising mortgage rates feel uncomfortable because we got used to cheap money for so long. But here's what I remind myself: a 5% mortgage rate isn't historically abnormal. It's only painful compared to the 2.5% rates we enjoyed briefly during the pandemic.

The real test of a good investment isn't whether it works at 3% or 4%. It's whether it works at 5%, 6%, or even 7%. If your property only stacks up in a low-rate environment, you don't own an investment. You own a gamble.

So no, I'm not panicking about mortgage rates rising. I'm doing what I've always done: buying and building in suburbs with strong demand, looking for properties with renovation potential or a twist that lets me add value, stress-testing my numbers, locking in certainty where it makes sense, and keeping my focus on the long game.

Because that's how you build a portfolio that survives the headlines, and comes out stronger on the other side.