Westpac cuts two-year mortgage rate to 5.29% as other terms rise

Westpac NZ mortgage rate update | Announced 18 September 2026 | Effective 21 September 2026

New Zealand mortgage rates are not all moving in the same direction. Westpac NZ announced on 18 September 2026 that its advertised two-year special fixed home loan rate will fall to 5.29% p.a. from Monday 21 September, while most of its other fixed mortgage rates rise.

For homeowners approaching a refix, the move is a reminder that choosing a fixed term involves more than asking whether interest rates are going up or down.

Westpac’s two-year advertised special rate falls by 0.16 percentage points to 5.29% p.a. Its other fixed home loan rates rise by 0.10 to 0.26 percentage points. The changes take effect on 21 September 2026.

Westpac attributes the move in most terms to a sharp rise in wholesale funding costs. The bank said its two-year special was the lowest advertised two-year rate among New Zealand’s five biggest banks as of midday on 18 September, and that about one-third of its current home lending is fixed for two years. That comparison may change as banks reprice.

• 6 months: 4.89% p.a., up 0.14 percentage points
• 1 year: 5.19% p.a., up 0.20 percentage points
• 18 months: 5.45% p.a., up 0.10 percentage points
• 2 years: 5.29% p.a., down 0.16 percentage points

These are advertised special rates effective 21 September 2026. Rates and eligibility can change; check Westpac’s announcement and terms before making a decision.

Wholesale rates influence what banks pay to fund fixed-term lending. That is one reason fixed mortgage rates do not follow the Reserve Bank’s Official Cash Rate one-for-one. The OCR remains important, especially for floating borrowing costs, but banks also consider wholesale markets, expected future rates and competition when setting fixed rates.

Westpac has reduced one popular term while raising most others. This shows why it pays to compare the full rate card rather than assume all fixed terms will move together.

The lower two-year rate does not mean everyone should choose two years. A longer fixed period may appeal if you value repayment certainty and want some protection against future increases. A shorter term may suit someone who wants an earlier chance to reassess. Your circumstances and plans matter more than the headline rate.

When comparing options, consider your repayments, desired certainty, potential income changes, plans to sell or make lump-sum repayments, break-cost risk, cashback offers, current loan structure and ability to manage a higher rate later. Our refinance and refix guidance can help you weigh the whole deal.

A competitive advertised rate can make refinancing worth investigating, but switching banks may involve legal and valuation costs, existing cashback clawbacks, different account features and a new lending assessment. A new cashback offer may offset some costs; your current lender may offer a competitive retention rate. Compare the overall financial outcome, not just the advertised percentage.

First-home buyers should check eligibility before planning around any special rate. Westpac’s lending criteria and terms apply, and a low-equity margin may apply. Your deposit, debts, expenses and the lender’s servicing assessment affect affordability as well as the rate. Read our first-home buyer guidance for a broader starting point.

Investors may weigh cash flow, future property plans and portfolio structure differently. If you expect to sell or restructure lending, flexibility can matter more than a slightly lower advertised rate. See our investment property loan guidance.

Watch whether other major banks respond to Westpac’s two-year pricing, how wholesale funding rates develop and future Reserve Bank decisions. There is no certainty competitors will match this move. If your fixed term is close to expiry, compare available options early so you have time to understand the trade-offs.

What is Westpac’s new two-year mortgage rate?

Its advertised two-year special fixed rate is set to be 5.29% p.a. from 21 September 2026, subject to eligibility and change.

Is Westpac cutting all mortgage rates?

No. Most of its other fixed home loan rates are increasing by 0.10 to 0.26 percentage points.

Is two years the best term to choose?

That depends on your finances, plans and preference for certainty. A lower advertised rate does not settle the whole decision.

Could other banks change their rates?

Yes, but there is no certainty they will. Bank pricing can change at any time.

Can borrowers with less than 20% equity get the same rate?

Eligibility depends on Westpac’s lending criteria and individual circumstances. A low-equity margin may apply.

Source: Westpac NZ mortgage-rate announcement, 18 September 2026.

This article provides general information only and is not personalised financial advice. Interest rates can change without notice. Lending criteria, eligibility, fees, margins and individual circumstances apply.