The Reserve Bank of New Zealand (RBNZ) made a small move last month, trimming the Official Cash Rate (OCR) from 3.50% to 3.25%. While this cut was expected, everyone’s real question is: what happens next?
According to Cotality Chief Economist Kelvin Davidson, further cuts might be on the cards, but they’re far from guaranteed. Why? Because inflation is currently sitting within the RBNZ’s 1–3% target range, and the economy is still a bit wobbly. Add in a dose of global uncertainty (hello, trade tensions), and the Reserve Bank is likely to take things cautiously.
In fact, one member of the RBNZ’s Monetary Policy Committee voted to leave the OCR unchanged. So, while there could be another one or two cuts later this year or early next, they probably won’t be at every meeting.
But what does this mean for you?
Fair question! If you’re a buyer or already have a mortgage, this latest OCR cut might not change things dramatically right now… But it should bring some relief from those massive interest rates from a couple years ago if you’re due to refix soon! Some banks had already adjusted their rates before the announcement and while there’s still room for small changes, the biggest drops may already be behind us.
As for house prices? Mr Davidson is predicting a slow and steady climb, with the Reserve Bank forecasting property price increases of 3.5% in 2025 and 4.8% in 2026. But he also notes that the pace of this recovery is likely to be moderate, thanks to tighter lending rules and a still-soft economy.
Keen to know what this could mean for your mortgage or property plans?
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