Since the Reserve Bank dropped the Official Cash Rate (OCR) by a bumper 0.50% last week, it’s been all eyes on mortgage rates.
The banks were quick to pass the full reduction on to their floating rates, but it’s only been in the last couple of days that we’ve seen the benefit start to flow through to fixed-term mortgage rates as well.
Looking at advertised rates, the best deal out there for the one-year term right now is 5.95%—but under the counter, we’re seeing some lenders willing to go as low as 5.59%.
Our next OCR announcement is coming up on the 27th November, and increasingly it’s looking like that’s going to bring another significant reduction as well.
Assuming things play out as expected, that means we could see one-year fixed rates much closer to 5% by Christmas.
And with this series of sharp rate decreases seemingly on the cards, wholesale rates should drop pretty significantly as well—which could have interesting implications for longer-term rates.
There’s a chance we could see three-year fixed term rates at 4.95% before the end of the year, and that’s starting to look like a really attractive rate for borrowers.
If you’re heading for a fixed-rate rollover in the coming weeks, or you’re about to settle on a new property, the recommendation would be to just sit tight on a floating rate for now—until we’re out the other side of that November OCR date—then fix once further rate cuts have flowed through to the market.
Check back next week for the latest on what’s been happening with interest rates in New Zealand.
