PHOTO: New Zealand mortgage holders might want to brace for disappointment — experts warn interest rate relief could be near its end. FILE
💰 The Mortgage Rate Slide Might Be Slowing Down
After a year of falling interest rates and a steadily declining Official Cash Rate (OCR), thousands of Kiwi homeowners have finally been able to breathe easier. But could that relief soon vanish?
As it stands:
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Floating mortgage rates average 6.92%
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1-year fixed rates sit around 5.64%
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2-year fixed deals hover near 5.63%
That’s with the OCR at 3.25% — a level set to be reviewed again on Wednesday, July 9. But don’t bank on big changes.
🔍 Are More Cuts Coming? Experts Say… Probably Not
According to Infometrics principal economist Brad Olsen, we may have already seen the best of it.
“We continue to think that mortgage rate cuts have largely run their course,” Olsen told 1News.
With wholesale interest rates and swaps showing limited room to move, the market isn’t anticipating dramatic drops anytime soon. Banks might still tweak rates for competition’s sake, but meaningful OCR-linked cuts are likely behind us.
🛑 OCR Cuts to Pause – But for How Long?
Forecasts from ASB and ANZ agree: the Reserve Bank is expected to hit pause on the current rate-cut cycle.
ASB sees the OCR sitting in a “goldilocks zone” for now, while ANZ cautions that inflation uncertainty — including possible fallout from Trump’s proposed tariffs — could reduce the need for further reductions.
Still, Olsen says there may be one more cut “pencilled in before the end of 2025,” potentially bringing the OCR as low as 2.5% — but no lower.
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🏠 Housing Market: Buyers Still Cautious, Sellers Still Waiting
While some headlines show small bumps in house prices and sales volumes, Olsen is clear:
“There’s just too many sellers and too few buyers at present.”
With stock levels high and population growth softening, demand isn’t expected to bounce back fast. Lower rates may stir up more housing activity eventually — but not overnight.
💸 Will Lower Rates Boost the Broader Economy?
Homeowners refixing at lower interest rates could free up thousands in disposable income — but don’t expect a sudden spending spree.
“With higher unemployment, people are likely to be planning for a ‘rainy day’,” Olsen says.
For now, most Kiwis appear to be saving rather than spending, with many cautious about the economy’s uncertain direction.
🔁 How Are Kiwis Refixing Their Mortgages?
RBNZ data reveals a strategic shift in how borrowers are locking in their deals.
Early in the year, the majority went with floating or short-term fixes — chasing flexibility in a falling-rate environment. But by March and April, the trend reversed:
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61% of new mortgage lending went to 1–2 year fixed terms
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Just 36% opted for floating or six-month fixes
This suggests growing borrower preference for certainty — and concern that rates may not drop much further.
📆 Next OCR Announcement: July 9
Mark your calendars. The Reserve Bank’s next move will be announced Wednesday, July 9 — and while most experts expect a hold, the tone of the statement could hint at what’s coming for the rest of the year.
📌 Bottom Line
The golden era of rate cuts might be fading fast. While some further relief might still trickle through, most economists believe the major easing is already done. If you’re waiting for 3% home loan deals to return — don’t hold your breath.
SOURCE: 1NEWS