Things have still been pretty quiet on the mortgage rates front over the last few days.
Now that we’re only a few weeks out from our next Official Cash Rate (OCR) announcement on 9th October, it feels like the market—along with the rest of New Zealand—is camping out to see what the Reserve Bank has in store for us.
The widespread expectation is that we’ll get another 0.25% cut in October, followed by another 0.25% reduction for our final OCR announcement of the year on 27th November.
Assuming things play out in line with those expectations, that would take us down to an OCR of 4.75% by the end of the year.
That, in turn, should mean one-year fixed rates drop below 6% heading into Christmas, potentially around 5.95%, making that a pretty attractive option for borrowers.
The advice for anyone refixing or buying a new house at the moment would be to hold off fixing in the short-term—settling on or letting your mortgage roll over to a floating rate—and then looking to fix after further rate falls have come through over the rest of the year.
Floating rates are significantly higher than fixed rates, so it’s not a strategy you want to stick with any longer than you have to.
But with the possibility of one-year fixed rates dropping below 6% by the end of the year, opting to pay a little bit extra in the short-term means that you’ll be in a position to take advantage of those lower rates as soon as they come through.
Check in again next week for our latest update on what's been happening in the world of New Zealand interest rates.
