PHOTO: RNZ
There’s been a significant reversal in interest rate markets, leaving homeowners uncertain about their mortgage decisions. Previously, there was anticipation for a cut in the official cash rate (OCR) later this year, prompting expectations for more aggressive reductions in home loan rates. However, this sentiment has shifted dramatically.
ANZ’s recent announcement forecasts two rate hikes this year, a stark contrast to earlier predictions of a rate cut in August. Similarly, wholesale markets have adjusted their outlook, now pricing in a potential OCR hike as early as May, with expectations for subsequent cuts afterward.
The sudden change has led to considerable market volatility, reflected in rising wholesale rates. Factors such as stronger-than-expected wage growth data have fueled this shift, suggesting delayed rate cuts and even imminent rate hikes.
Despite the current uncertainty, borrowers should brace for continued rate fluctuations. While rates may not see a sustained decline immediately, they’re not expected to stay at current levels for the long term. It’s a time of preparation and vigilance for borrowers, as market sentiment plays a crucial role in influencing Reserve Bank decisions.
BNZ’s chief economist emphasizes the importance of monitoring market expectations, as they could sway Reserve Bank actions. With the possibility of tightening measures looming, borrowers should stay informed as decision day approaches.
SOURCE: RNZ