With our next Official Cash Rate (OCR) announcement now just a few days away, coming up on the 9th April, interest rates are in a bit of a holding pattern at the moment.
Expectations are that the Reserve Bank (RBNZ) will stay the course it laid out for us in February—even with former Governor Adrian Orr no longer at the helm—delivering a 0.25% cut this time round to take the OCR from 3.75% to 3.50%.
Shorter-term rates are predicted to fall slightly off the back of the move, and the hope is that (once the reduction has had time to flow through to the market) that could finally bring one-year fixed term rates down below 5%.
With some of those longer-term rates already looking really attractive—particular that 4.99% two-year rate most lenders have on offer—there’s not likely to be much (if any) movement at that longer end of the spectrum.
The advice to anyone heading for a refix over the next few weeks, or settling on a new loan, is to hold off on locking in your interest rate for as long as possible, which will just give the market time to respond to the OCR change and pass that through to mortgage rates.
Now that we’re nearing the bottom of the interest rate cycle, it’s also worth thinking about splitting your mortgage across a mix of different terms—locking in half for, say, two to three years, while keeping the remainder on a shorter-term.
That’s going to give you certainty around the portion you’ve locked in longer-term, as well as the flexibility to take advantage of the further rate falls we’re expecting to see over the coming weeks and months.
Check back in next week for the latest on New Zealand interest rates.
