In addition to our usual interest rates update, this week’s news is all about inflation.
The latest CPI inflation numbers were released earlier this week, and thing are still tracking as hoped—very much on a downward trajectory
Inflation for the June 2024 quarter came in at 0.4%, below the Reserve Bank’s (RBNZ) prediction of 0.6%.
According to the official numbers, annual inflation is now sitting at 3.3%, just outside the RBNZ’s target range, but that should come down significantly once inflation for the September 2023 quarter (1.8%) drop out of the equation later this year.
Continuing on the same theme as our other recent updates, all the data we’re seeing out there at the moment is still painting a picture of a very weak economy.
The widespread expectation remains that the RBNZ will move to drop interest rates by 0.5% in November—although it could be sooner
That's seen wholesale rates fall by about 0.5% over the last couple of weeks—which is starting to translate through to lower mortgage rates as well.
The best one-year rate out there at the moment is 6.77%, which is down from where it’s been over the last little while. There’s evidence to suggest that rate could drop even further over the coming months, too.
Anyone looking to fix or refix their mortgage in the coming weeks would be well advised to lock in for six months.
The best six-month rate in market is running somewhere between 6.85% and 6.95%, so slightly above the one-year rate, but it means you’ll be able to transition to lower rates faster once they do start to come through.
Although it might be pretty tempting right now, we’d caution against moving your mortgage onto a floating rate—simply because it’s so much more expensive. And with some uncertainty still remaining around exactly when rates will fall, and how quickly, the benefit is unlikely to outweigh the cost.
Check back again next week for the latest news and updates on New Zealand interest rates.
