OCR

When Banks Do the Hokey Pokey: Lowering Rates & Making Housing Moves!

New Zealand's banks are finally feeling the pressure to lower interest rates after the recent OCR cut, giving the housing market a much-needed boost!

New Zealand's financial scene is rocking a new tune thanks to the Reserve Bank's latest move to cut the Official Cash Rate (OCR) by a spicy 50 basis points to 3.75%. This reduction has sent a ripple effect through the banking sector, urging our local banks to pass on these savings to borrowers and savers alike. It's high time for the banks to compete more vigorously, just like those over-caffeinated Kiwis we know and love. So when are banks like Westpac going to step up and drop those variable rate products? Just a heads up to everyone who’s been waiting for those interest rates to fall – now might be your time to shine!

Speaking of shining, the housing market is getting a lovely little facelift thanks to this OCR drop. With experts like Core Logic’s Nick Goodall and REINZ CEO Jen Baird buzzing with excitement, there’s buzz in the air that house sales and prices are set to bounce back like a rugby ball at a local match. From a low of 59,000 in mid-2023, residential property sales are climbing to nearly 71,000! This isn't just hype; it's fuel for future buyers who were previously sidelined.

Economists are also chiming in, suggesting that this change will not just benefit existing mortgage holders but will also see more banks lowering fixed-rate mortgage options in the weeks ahead. It seems that with the OCR cut, lending rates will be getting a bit friendlier – perfect for all those new home buyers who love a bargain. Meanwhile, whispers that Trump's trade tariffs might unsettle global economic growth haven't deterred our resilient Reserve Bank from providing a boost where it's needed the most.

In hindsight, a 50 basis points drop might not seem monumental, but the implications for New Zealand’s economy, particularly the housing market, are monumental. And here's an interesting nugget – the OCR was historically as high as 8.25% in 2008! New Zealanders can keep their fingers crossed as we look forward to a more prosperous future in our housing market. So grab those house-hunting glasses and keep a lookout at your banking options - change is in the air!