We’ve got our next Official Cash Rate (OCR) announcement coming up in two weeks’ time, on 28 May. So, what might the Reserve Bank have in store for us?
The expectation is that we’re going to get another 0.25% cut, bringing the OCR down to 3.25%.
That’s going to pave the way for shorter-term interest rates to fall a bit further, and means we should see one-year fixed rates—currently at 4.99%—get down comfortably below 5% over the next month or two.
Longer-term rates probably don’t have much further to fall, simply because they’re much more heavily impacted by what’s playing out overseas.
With all the volatility going on globally with the US (tariffs), India and Pakistan, Russia and Ukraine, and China (on a few different geopolitical fronts), that’s going to hold longer-term rates up slightly.
Shorter-term rates, though, will track downwards with the OCR—and are expected to level out at around 4.50%.
So, what does that all mean for borrowers?
With interest rates nearing the bottom of the cycle, it’s a smart time to be thinking about splitting your loan across a mix of shorter- and longer terms.
Having part of your loan fixed for longer just gives you some interest rate certainty, while having the remainder on a shorter term means you’ll be in a good position to take advantage of lower rates as they come down that little bit further.
Check in again next week for the latest news on New Zealand interest rates.
