Wholesale rates have fallen about half a percent in recent weeks, largely off the back of the dismal GDP result we had last month (for the June 2025 quarter).
It’s why we had the banks coming out in the lead up to last week’s Official Cash Rate (OCR) cut, delivering reductions across a number of their fixed mortgage rate terms.
One-year fixed rates are sitting at 4.49%, and Westpac is offering a five-year rate at 4.99%—which is a really good deal.
We’re not expecting to see too much in the way of further falls from here.
There may be one more OCR cut to come before the end of the year (on 26 November) but otherwise it feels like we’re very much at the bottom of the interest rate cycle.
Now, it’s worth noting that the RBNZ still sees a ‘neutral’ OCR as being 3.00%. With the OCR currently sitting at 2.50%, that means we’re very much in a stimulatory rate environment.
Once the RBNZ is confident that the economy is firmly on the road to recovery, we should expect to get a couple of OCR increases to take us back to that ‘neutral’ point.
At that level, the one-year mortgage rate is likely to settle at around 5.00%.
Anyone looking to refix or settle on a new mortgage at the moment would be advised to split their loan across a mix of shorter and longer terms.
Particularly if you’re concerned about the potential for slightly higher mortgage rates, it would make sense to lock in some (or all) of your loan for longer, taking advantage of some of those longer-term rates out there below 5.00%.
Chatting with a mortgage adviser is always recommended, for guidance on the approach that’s going to be best for you and your situation.
Check in again next week for the latest news on New Zealand interest rates.
