On Wednesday, the Reserve Bank delivered its latest Official Cash Rate verdict—once again holding things steady at 5.5%, where it’s been since May 2023.
There was no surprise in the outcome. Although there were definitely a few optimists out there quietly hoping that we might see the start of interest rate falls this week, most of the market had been anticipating no change.
In classic RBNZ fashion, it wasn't giving much away in terms of when rates might start to come down again
But it did acknowledge all the really weak economic data that’s continued to come through in recent weeks—and has said that it’s now expecting inflation to fall to somewhere between 2% and 3% (back within its target range of 1% to 3%) by the end of the year.
And if that’s the case, interest rates should follow suit relatively quickly.
So even though we’re not quite there yet, signs are good that we’re getting closer to those reductions we’re all hoping for.
In recent weeks, a number of the banks have revised their predictions for when interest rates will start to drop. Up until not long ago, many were picking mid-2025, but the general consensus now is that November's OCR announcement will be the one to watch.
This week’s OCR outcome means we’re unlikely to see much change in terms of mortgage rates over the coming weeks
Anyone looking to fix right now would be well advised to lock in for somewhere between six months to a year.
Any longer than that, and you risk being unable to take advantage of interest rate falls when they do start to come through—which is likely to be at some stage in the next six months or so.
The best one-year rate out there at the moment is still that same 6.85% we’ve had for a while now. While, for the six-month term, you’re looking at somewhere between 6.89% to 6.95%.
Check in again next week for our latest update on what's happening with interest rates in New Zealand.