PHOTO: Why Are Mortgage Rates Dropping? FILE
📉 OCR Cuts by the Reserve Bank:
The Reserve Bank of New Zealand has slashed the Official Cash Rate (OCR) from 5.5% to 3.25% over the past 10 months. More cuts are expected by the end of 2025.
💼 Falling Wholesale Rates:
Two-year swap rates have dipped to ~3.4%, down from 5.8% in late 2023. This directly affects how banks price their mortgage products.
🏦 Global Conditions:
Weak global demand and stabilizing inflation have given the RBNZ the confidence to stimulate the economy through lower borrowing costs.
🏦 Current Bank Mortgage Rates (June 2025)
| 🏦 Bank | 📅 Term | 💰 Rate |
|---|---|---|
| ANZ | 18-month fixed | 🔽 4.89% |
| ASB | 1-year fixed | 🔽 4.99% |
| Westpac | 6-month fixed | 🔽 5.89% |
| Kiwibank | 1-year fixed | ⭐ 4.89% (lowest) |
| BNZ | 2-year fixed | 🔽 5.10% |
Source: Bank websites & RBNZ data
🧾 RBNZ National Averages (April 2025):
-
Floating: 6.56%
-
6-month: 5.82%
-
1-year: 5.19%
-
2-year: 5.08%
📊 What Does This Mean for Homeowners?
💸 Affordability is Improving:
Average mortgage repayments are now down from 50% to ~35% of household income, making homeownership more realistic for many.
📈 House Prices Rebounding:
A Reuters poll forecasts a 3.8% rise in home prices across New Zealand this year.
📄 More Mortgage Applications:
Loan inquiries are up, with buyers looking to lock in before rates rise again.
“Mortgage Rates to Crash in 2025?” Our Bold Forecast Revealed
🔮 What Could Happen Next?
🟢 More OCR Cuts Likely:
Two more 25 bps OCR cuts are forecast before year-end—possibly pushing mortgage rates even lower.
📉 4% Rates in Sight?
Some analysts believe we may see 4.25% fixed rates within 6–9 months if swap rates continue falling.
⚠️ Caution from Banks:
Banks like ANZ are warning that most of the drops have already happened. Future rate cuts will likely be smaller and slower.
🧠 Smart Mortgage Strategies for 2025
📝 1. Fix Short-Term Now
Take advantage of the lowest 6–12 month fixed rates now, and reassess in early 2026.
🔄 2. Refinance Often
Review your loan before rollover and reserve a rate early (e.g. ANZ lets you lock in 60 days in advance).
👀 3. Watch the OCR Calendar
Follow RBNZ announcements to time your mortgage decisions effectively.
✅ Final Take
New Zealand mortgage rates are at their lowest since 2021, driven by aggressive OCR cuts, falling wholesale rates, and cautious optimism in the economy. While the window for ultra-low fixed rates may not be open forever, savvy borrowers can take advantage of the current conditions to save thousands.