Thanks to the 0.50% OCR cut by the RBNZ in early October, rates are now well and truly on their way down. And the expectation is that there will be a further cut of 0.50% later this month. There was talk of it being even more than 0.50%, but Trump’s election and better than expected employment figures seemed to have made this unlikely.
The 1 year fixed mortgage rate is already below 6%. So a further fall to around 5.50% seems not far away. And a 1 year rate of around 5% seems likely as early as the middle of next year.
Some argue it will go below this level. Jarrod Kerr at Kiwibank sees the RBNZ cutting the OCR all the way to 2.50%. This would imply a 1 year mortgage rate of around just 4%. However that is by no means certain with others predicting the cuts to stop at an OCR of 3.00% to 3.50%. So I’d budget on a mortgage rate of say 5% for now, but there is potential for it to go lower.
As you would expect, investors are beginning to return to the market and home buyers will begin to face more competition. Its pleasing to see that first home buyers have used the recent absence of investors to their advantage. For the first time in decades home ownership in NZ has actually increased – its slowly but surely been in decline for 30 years. This is perhaps surprising given the high interest rates, but surely good news for the financial well-being of NZers.
Please do not hesitate to get in touch with any questions or concerns. And if family or friends need advice on a new or existing mortgage, then they are welcome to get in touch.
