The Reserve Bank has increased the Official Cash Rate by 0.25% to 2.75%.
Inflation currently sits at 4.1%, the RBNZ says the increase is intended to help bring inflation back towards its 2% target, whilst continuing to support economic recovery.
It’s not entirely unexpected, but it does mean we are in a market where being proactive with your mortgage makes a difference.
So, what’s happening to mortgage rates?
The OCR has the biggest influence on floating rates, and this latest increase is likely to flow through to borrowers.
Fixed rates are a little different.
Banks have already been factoring higher wholesale rate costs into their fixed rates, so we’re not necessarily expecting this OCR increase to translate directly into increases across fixed mortgage rates.
For borrowers, the takeaway is simple: Don’t make your mortgage decisions based on the OCR announcement alone.
Your loan structure, fixed rate expiry, equity, income, plans and the rates and terms available from different lenders all matter.
This is a good time to check your position
👉 Is your fixed rate is coming up for renewal? Let’s look at your options before you automatically refix.
👉 Are you currently on a floating rate? With the OCR now higher, is floating still working for your cashflow and plans, or is it time to consider a different strategy?
👉 Waiting for the election? If you’re holding off making a decision, let’s talk through what you’re waiting for, whether that strategy makes sense for your situation, and what we can do now to prepare you.
We can help you work through:
- When to refix and which term and structure may make sense for you
- Whether your current loan structure still works
- What different lenders are offering
- Whether refinancing or restructuring is worth considering
- How the latest rate movements could affect your repayments
There’s no need to predict exactly where rates are heading. The important thing is making sure your mortgage is set up to work for you in the market we’re actually in.
If you want to talk it through, just give us a shout.Â
