We’ve got our next Official Cash Rate (OCR) announcement coming up next week, on 28th May.
The widespread expectation is that we'll get another 0.25% cut from the Reserve Bank, taking the OCR from 3.50% to 3.25%.
That reduction is already largely factored into wholesale rates, so it’s not likely to have a huge impact on mortgage rates in market.
We might see a little bit of downward movement at either end of the fixed rate spectrum—potentially bringing the six-month rate down closer to 5%, and tipping the three-year term below 5%—but not much beyond that.
What’s holding us back from any more significant drops is all the global uncertainty as a result of Trump's trade tariffs, and concerns around what they could mean for inflation.
If you’re heading for a refix in the next few weeks, or settling on a new loan, it’s worth thinking about splitting your mortgage and taking advantage of a mix of different terms.
Fixing part of your loan for slightly longer just gives you some interest rate certainty. The two-year rate at 4.99% feels like a really attractive option at the moment—and if we see the three-year rate get down to that level in the coming weeks, that would definitely be one to jump on.
Then, by keeping the remainder on a shorter-term, you also get the flexibility to take advantage of further rate falls as they come through. You could look to fix a portion for a year, with the expectation that when that loan matures in 12 months' time, you'll be rolling onto a slightly better rate.
Make sure to check back in next week for the latest news on New Zealand interest rates and the OCR.
