RBNZ October OCR announcement: What you need to know:
Today’s announcement from the Reserve Bank of New Zealand (RBNZ) Monetary Policy Committee that the Official Cash Rate (OCR) will be reduced to 4.75 percent brings fresh momentum to the property market. This decision to cut the OCR by 50 basis points, combined with recent trends in the housing sector, creates a promising environment for both existing homeowners and prospective buyers.
However, the RBNZ announcement did come with a warning around low economic growth due to low productivity growth, alongside weak consumer spending and business investment. The Monetary Policy Committee also noted that “while wholesale and bank interest rates have declined, financial conditions remain restrictive, and credit demand remains subdued. The current preference for shorter-term mortgage rates by borrowers will increase the speed with which changes in the OCR influence household cashflows over coming months.”
The OCR cut is significant, particularly as interest rates continue to trend downward and the New Zealand housing market experiences unprecedented stability. Over the past week, most of the main banks in New Zealand lowered their short-term rates in anticipation of a further drop to the OCR, with ANZ leading the way with a 5.59% special one-year rate. While we have seen this matched by some of the other main banks via negotiation, ANZ’s 5.59% one-year rate is a huge 0.5% less than the next closest one-year rate of 6.09% and a full 1.1% less than the lowest six-month rate currently on offer.
As rates decrease, it creates opportunities for mortgage holders to refinance at lower rates, easing monthly payments and providing financial flexibility. For those looking to reduce debt more aggressively, maintaining repayment amounts at current levels while benefiting from a lower interest rate can significantly shorten mortgage terms.
This strategy can lead to substantial savings over the life of the loan, making it an excellent time to reassess mortgages and explore refinancing options. Even a small reduction in interest rates can translate into thousands of dollars saved, a clear win for homeowners looking to get ahead financially.
For our latest interest rate insights, including general advice relating to how long we are recommending clients fix for, click here.
With competition for customers being fierce right now between lenders, we are seeing banks not only paying cash considerations to new clients but also retention bonuses for those clients who stay loyal. It is important to note however that contributions and bonuses aren’t necessarily offered as a matter of course, so it’s important to speak to your adviser and ask them to negotiate a strong mortgage package on your behalf.
Falling rates and competition by banks for market share provides an ideal backdrop for those considering their next move in the property market, whether you’re looking to buy your first home, re-fix or re-finance, or move up the property ladder.
Recent market reports, including data from Realestate.co.nz, reveal an extended period of price stability across New Zealand’s housing market. In fact, this has been the longest stretch of consistency in over 17 years, marking a shift toward a buyers’ market. High levels of housing stock across the country provide a broad range of options for those looking to purchase. Combined with the downward trend in interest rates, it’s a rare alignment that favours buyers.
With more listings across major cities and regional areas than we’ve seen in recent years and historically low-price movements, buyers should feel more confident to make informed decisions. With stock levels up and interest rates falling, buyers can act with greater certainty about market conditions.
In addition to favourable mortgage conditions, broader economic indicators suggest a positive outlook for homeowners and buyers alike. The ANZ-Roy Morgan Consumer Confidence Index recently reached its highest point since December 2007, signalling that New Zealanders are feeling more optimistic about their financial future. This renewed confidence reflects overall economic stability, characterized by lower unemployment and improved spending power, complemented by the benefits of declining mortgage rates.
As consumers feel more secure, they are more likely to engage in major financial decisions—such as purchasing homes or investing in property upgrades. This heightened confidence, coupled with the falling OCR, creates a promising picture for the property market in the months ahead.
If you’ve been waiting for the right moment to enter the property market, this could be the opportunity you’ve been hoping for. The combination of stable house prices, high availability of stock, and declining interest rates provides ideal conditions for buyers to secure favourable terms on their loans and find the right property without the pressure of an overheated market.
For homeowners, the latest OCR cut presents a chance to take control of your mortgage. Refinancing at lower rates can provide breathing room in your monthly budget or help you pay off your mortgage sooner if you’re keen to reduce debt. Being proactive in your financial decisions during this climate can position you for long-term financial success.
Navigating the current market conditions can feel overwhelming, especially with interest rates in flux. At Threefold, we are here to help you make the most of these opportunities. Whether you’re a first-time buyer looking to take your first step on the property ladder, a homeowner considering your options, or a property investor looking to maximise returns, our team can provide personalised advice based on your financial goals and current market conditions. And best of all, our advice to you is free.
To book a free consultation with a member of our team, click here.
The content of this article should not be taken as financial advice, or a recommendation of any financial product. These insights are based on current economic commentary, market pricing for interest rates, and our personal opinion. Threefold is not liable or responsible for any information, omissions, or errors present.
