As expected the RBNZ cut the OCR by 0.50% on Wednesday this week.
They also signaled further smaller cuts to come of 0.25% each, probably in April and May.
While the 6 month mortgage rate remains close to 6%, ANZ have now cut their 1 year rate to 5.29% and their 2 year rate to 4.99% and it seems likely that the other banks will follow suit. The 6 and 12 month rates will no doubt fall further, but the future path of the longer term rates is less certain.
The 3 to 5 year rates appear to have stopped falling and remain close to 5.50%. This is despite the NZ economy continuing to struggle with rising unemployment and little or no growth.
The concerns about inflation in the medium to long term seem driven by both local and overseas factors. Trump's introduction of tariffs is certainly inflationary and he has also proposed tax cuts as well. Locally many are predicting a rapid recovery of the NZ economy and also that NZ businesses will use this recovery as an opportunity to raise their prices.
Some are already recommending a return to fixing longer term. Personally I think it wise to wait a little longer to see how things play out. But there is no question that the future path of mortgage rates is now less certain than its been for a while.
Please do not hesitate to get in touch to discuss your own situation. And if family or friends need advice on a new or existing mortgage, they are welcome to give me a call.
