Seven major trends that could hit your wallet, Kiwisaver and investments in 2026

Monday, 22 December 2025

Making predictions in the current era feels a bit like putting your hand into a bottomless jar of Skittles and trying to guess which colour you’re going to pull out.

At best, it’s a guessing game. At worst, you pull out the right colour and imagine yourself a clairvoyant.

I am no clairvoyant and tend to leave the soothsaying to the oracles in Greek mythology (although I do have particular liking for green Skittles), preferring instead to look at a few interesting trends that could determine how the coming year pans out.

Here’s a rundown of seven things a few experts suggested we keep an eye on as we march our way through what promises to be a year filled with Trump, AI, elections and general volatility.

1. The great refinance wave

New Zealand homeowners have been quietly waiting for the opportunity to refix after a brutal period of interest rates.

With the Official Cash Rate (OCR) now sitting at 2.25% rates are currently as low as they’re likely to be during this cycle.

Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene, tells me 40% of fixed mortgages will come up for renewal in the first half of 2026.

Even though mortgage rates have started to climb again, the relief will be enormous for the average household.

Two years ago, many of us would have been looking at two-year fixed rates as high as 7%, while it’s around 4.75% today.

The monthly repayment on a $500,00 mortgage at 7% would have been about $3300. At 4.75% you’re looking at $2600, so you’re talking about a difference here of $700 per month.

The question now is what New Zealanders decide to do with that money. Do they spend it, invest it or pour it back into the mortgages to pay down principal? The choices we make will determine how much more we’re able to invest or how many years we can shave off our mortgages.

2. A fragile recovery

All signs are pointing to a recovery, but the level of enthusiasm remains tempered by broader trends impacting the workforce. Sullivan says Treasury expects unemployment to peak at 5.5% by the end of the March 2026 quarter, meaning many households will still feel nervous to spend too liberally in the new year.

On top of this, the impact of automation will start to worm its way through the workforce, according to Pie Funds founder Mike Taylor.

“Automation has a funny way of creating new jobs while taking away old ones, but the timing rarely lines up,” says Taylor.

“In 2026, layoffs will spread through management and service sectors, and that will dent consumer confidence… Households could tighten their belts, spending could slow, and even the housing market could start to cool. A fragile consumer makes for fragile growth.”

This is partly why economists are keeping such a close eye on the labour market. If Kiwis don’t feel confident in their ability to find new jobs, they will take a more defensive approach.

Our job-finding rate, which tracks the share of workers moving from unemployment to employment, is currently at a 30-year low, showing just how hard it is right now to find a new role. That needs to turn around if workers are to start feeling better about the workplace in 2026.

3. Changes at the Fed

US monetary policy is highly influential across the globe. What happens in the Federal Reserve impacts all of us, whether we realise it or not. The US dollar remains the most traded currency in the world, and the vast majority of trade is still conducted in US dollars.

The decisions of the Federal Reserve chair impact the US dollar, US stocks and also how much things cost to other countries. Current chair Jerome Powell is set to depart in May, and US President Donald Trump has expressed a desire for lower rates despite inflation being under control.

Harry Smith, a portfolio manager of international equities at Fisher Funds, explains that if the next Chair is sympathetic to Trump’s desire for lower interest rates, this could feed into the markets.

“[This] could be a tailwind for the stock market,” Smith says, which could be good for KiwiSaver balances in the short term.

However, on the flipside, this could lead to questions about the Federal Reserve’s independence and whether the US dollar should still serve as such a prominent currency in world trade.

We could also see the US come under further pressure due to Government debt and the elevated budget deficit.

This is all to say that US monetary policy could serve up a volatile year, depending on who next steps into the critical role of the Federal Reserve chair. All eyes will be on the pick that Trump ultimately makes.

4. New Zealand election

Closer to home, the New Zealand election will serve up two major talking points relevant to investors around the country.

Politicians have already started to roll out some policies, and it’s notable that two of the biggest announcements could impact KiwiSaver and property investors.

National has released a policy promising to raise KiwiSaver contributions to a total contribution of 12% (6% by the employee and 6% by the employer) by 2032. This would allow for a massive uptick in our national savings and ensure that we eventually aren’t as reliant on superannuation.

This policy has the potential to really change the savings trajectory of the country and should feature prominently in political discussions in the coming year.

The other big policy announcement came in the shape of Labour’s capital gains tax, which will raise questions about whether property investment is still as lucrative as it once was.

Property investors are starting to show signs of returning to the market, according to Kiwibank economist Sabrina Delgado, but it will be interesting to see how steadily this continues as we head into the election months.

The point is that good decisions can only be made when we have clarity on policy. And this is difficult in a year when big policies, like Kiwisaver and property investment, are being debated on the political stage.

5. AI’s next big test

The AI hype train made it through 2025 without a cataclysmic collapse, but this doesn’t mean it’s in the clear yet.

Smith believes 2026 could be the year we see the focus shift from the picks and shovels (like Nvidia) and start demanding tangible productivity gains. It’s great that AI is being built, but what can it actually be used for? If companies don’t start to provide convincing (and lucrative) responses to that question, we could be facing a rough ride.

“A disappointment in adoption or monetisation could trigger a repricing of tech megacaps that drags down the broader index,” says Smith.

As things currently stand, around 10 companies account for 40% of the total value of the S&P 500. Many of these 10 big firms have grown over the last three years on the back of the promise of AI.

If the reality falls below expectations, we could be looking at a significant correction in the market.

A number of investment specialists anticipate a correction of 10-15% in the coming year, with BCA Research going even further and predicting a 23% decline.

The broader context is important here, and history cannot be ignored.

RBC Wealth Management notes that since 1934, the S&P 500 has experienced an average 22% correction surrounding US midterm election years. This, combined with the jitters about AI, could make 2026 a rough year for investors.

6. S&P500 to hit 8000?

In contrast to those who believe we could be headed for a significant crash in 2026, there are also those who believe the market could be headed for a record that was previously filed away in the mythology section.

The S&P 500, an index tracking the 500 biggest companies in the United States, could ostensibly hit 8000 index points (this is the benchmark score used to track the performance of the index over time).

The market only recently crossed 6,000 and 7,000, and experts believe that crossing 8,000 would signal a new age of growth for the economy.

“Reaching 8000 by late 2026 is not out of the question,” says Greg Boland, a market strategy consultant at stock broking firm Moomoo Australia and New Zealand.

“It would require consistent mid-single-digit quarterly returns and no major shocks. It’s ambitious, but not unprecedented.”

Should this come to fruition, it will spell further good news for many Kiwi investors who have been pouring money into S&P500 index funds in recent years.

These funds regularly feature as the most popular among Kiwi investors, which means that many of us will be hoping to see fresh highs in the coming year.

The only thing standing in the way is the tiny question of exactly how over-inflated AI stocks are right now.

7. An eye on Europe

Beyond the ongoing unpredictability of the war between Russia and Ukraine, there are also some interesting economic changes happening across Europe.

Smith tells me Europe is quietly entering a new expansion phase.

Germany has suspended its debt brake, which allows for more investment in defence and infrastructure.

“European industrial and automation franchises appear to be particularly well-positioned to participate in the buildout of 'physical AI’, such as robots and autonomous systems,” says Smith.

This comes down to the actual application of the technology being built. However, things have a history of happening more slowly in Europe than they do elsewhere.

“Regulatory overhang and bureaucracy currently discourage innovation and investment,” says Smith.

But there are efforts to change that.

Former Italian Prime Minister Mario Draghi drafted a report on what needs to be done to make Europe more competitive.

“To date, Europe has implemented around 11% of Draghi’s 2024 competitiveness recommendations, and another 46% are in progress,” says Smith.

“Tangible benefits could make investors more constructive on Europe.”

This is important for Kiwi investors, who are looking to geographically diversify their portfolios so that they aren’t over-dependent on large US businesses – particularly when so much is now contingent on the performance of 10 large firms.