Between domestic OCR news, and all the global volatility we’re seeing at the moment, there’s a lot to unpack in the world of interest rates this week.
The Reserve Bank (RBNZ) delivered exactly as predicted on 9 April, cutting the Official Cash Rate (OCR) by a further 0.25%, taking it from 3.75% down to 3.50%.
Previously, that wasn’t expected to have too much of an impact on mortgage rates—but the fallout from Trump’s ‘Liberation Day’ trade tariffs (and the prospect of lower global growth) has seen wholesale rates drop pretty significantly in recent days.
That means there’s now scope for mortgage rates to fall a bit further, and we could see those one-, two- and three-year rates dip below 5% in the coming weeks.
In the short-term, we’re not expecting to see mortgage rates get much below 4.99%.
But in the longer-term, lower global growth prospects could be the catalyst for the RBNZ to lower its ‘neutral’ OCR forecast by around half a percent—from the current 3.00% to around 2.50%.
If that were to happen, that could see mortgage rates get down to the low-4s, rather than settling somewhere in the 4.50% to 5.00% range, as previously expected. Only time will tell on that front.
For anyone fixing or refixing their mortgage right now, the recommendation would be—once this latest OCR cut has flowed through, and we’re seeing three-year rates out there below 5%—to think about splitting your loan across a one-year and three-year term.
That just gives you a bit of flexibility—knowing that when the one-year fixed portion matures, you should be able to nab a slightly lower rate—and the certainty of having part of your mortgage locked in at a pretty good rate for the next three years.
Tune in again next week for the latest news and updates on New Zealand interest rates.
