More than half of New Zealanders believe higher interest rates are inevitable, with a net 57% telling ASB's latest housing confidence survey they expect borrowing rates to climb over the coming year.
The Reserve Bank will review the Official Cash Rate on Wednesday, with ASB tipping a second straight rise.
The net 57% survey result, covering the three months to July, was up from net 48% the previous quarter and the highest since April 2023, the bank said in its September report.
The Reserve Bank kicked off its tightening cycle with a 25 basis point OCR rise in early July, with ASB picking further increases at every remaining meeting this year.
ASB senior economist Jane Turner said the bank expected the OCR to hit 3.25% by the end of the year, a total lift of 100 basis points.
"We expect the RBNZ will remain proactive and hike the OCR 25 basis points at each remaining meeting this year," she said.
She said the risks sat with a slower pace of hikes, "with the potential for the RBNZ opting to pause at some point", particularly if domestic demand indicators stayed sluggish.
The survey also found little doubt in where respondents thought rates were heading: 62% of respondents expected borrowing costs to be higher in a year, 14% expected no change and 5% picked a fall.
House price confidence cools sharply, buyers still see opening
Turner linked the turnaround to the conflict in the Middle East at the end of February that drove up fuel prices and inflation forecasts.
"It has largely been a question of when would the RBNZ would start to lift interest rates, rather than if."
Mortgage rates have already started to move. The average two-year fixed rate had risen 41 basis points since January and the one-year rate 21 basis points, the report said.
The tougher interest rate outlook has dented housing price confidence, with net 9% of respondents expecting prices to rise over the next year, down sharply from a summer peak of net 30%.
The survey drew responses from 2929 people nationwide between May and July.
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