As expected, The Reserve Bank of New Zealand (RBNZ) has lowered the Official Cash Rate (OCR) by 50 basis points to 3.75%.
Where Are Interest Rates Headed?
With inflation sitting comfortably within the 1-3% target range, the expectation is that we’ll see more OCR cuts this year. Economists are predicting the OCR to drop another 0.5% – 0.75% by the end of 2025, which means short-term interest rates are likely to fall further.
Long-term rates are a different story. These are influenced by global markets rather than the OCR. We may see some lenders adjust their long-term rates but there is no guarantee that they will drop much further.
What Should You Do With Your Mortgage?
- Splitting your mortgage: A mix of short-term and mid-term fixed rates could be a good approach. This will give you flexibility to take advantage of potential future cuts whilst securing some stability.
- Short-term fixed rates:
We’re expecting to see these fall, which does make them an attractive option for those comfortable with some ratefluctuation - Longer-term fixed rates:
If you value predictability, rates around 4.99% for 2-3 years could be worth locking in.
KEY POINTS TO KEEP IN MIND:
- Lower rates mean more borrowing power and new opportunities for home buyers and investors.
- With the increased demand, bank turnaround times may slow down: Pre-Approvals are even more critical.
- More OCR cuts are likely, meaning short-term rates could keep falling.
- Long-term rates may not drop significantly, fixing a competitive rate could be a safe move.
What’s Next? Let’s Chat!
Whether you’re a homeowner or looking to enter the property market, now is a good time to review your mortgage.
Get in touch! We’re here to help you navigate these changes.
