The recent review of the Official Cash Rate (OCR) by the RBNZ saw no change in the rate. And the reviews due in mid-April and late May will probably also see no change. In fact some expect no change until 2025.
However Tony Alexander (former Chief Economist at BNZ) recently raised the possibility that the RBNZ have raised the rates too high. Retail spending (per capita) is well down on last year and house construction has also fallen sharply. The new government is restricting spending, as are many businesses. For these reasons Alexander thinks that a rate cut as early as this July is not out of the question.
The first OCR cut may well be later in the year, but more importantly, it could be followed rapidly by further declines due to a struggling economy. This would come as welcome relief for all mortgage borrowers. It would also probably spark a recovery in house prices as investors returned to the market.
In fact we have seen some small rate cuts by the banks already, but will probably need to wait until later in the year for more significant cuts. So all in all, now is definitely not the time to fix longer term.
If you, or anyone you know, would like to have chat about a new or existing mortgage, then please do not hesitate to get in touch.
