RBNZ announces lift to OCR
The Reserve Bank of New Zealand has lifted the official cash rate by 50 basis points to 2.5%, with lender interest rates expected to rise in due course.
It marks the sixth OCR increase in the last 12 months.
In reaching its decision, the RBNZ said the Committee agreed it remains appropriate to continue to tighten monetary conditions at pace to maintain price stability and support maximum sustainable employment. The Committee is resolute in its commitment to ensure consumer price inflation returns to within the 1 to 3 percent target range.
The level of global economic activity, combined with the ongoing supply disruptions largely driven by both COVID-19 persistence and the Russian invasion of Ukraine, continue to generate global inflation pressures. Food and energy prices are especially affected by geopolitical tension. However, the pace of global economic growth is slowing. The broad-based tightening in global monetary and financial conditions is acting to reduce spending growth.
Asset prices have also declined due to higher interest rates and a weaker earnings outlook.
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The latest interest rate rise is no surprise the finance industry, with experts predicting further OCR rises throughout the second half of the year.
Wayne Henry Mortgages director Wayne Henry (pictured) said house prices might stabilise or come back slightly as a result of today’s interest rate announcement.
“This is an opportunity for pre-approved first home buyers to come back into the market as higher interest rates will give them more confidence knowing property prices will not get too wayward or increase further,” Henry said.
“However, vendors that do not need to sell will probably sit firm. Their price expectations are now much more realistic, especially if they want to sell in a reasonable timeframe.”
Henry said today’s RBNZ announcement would enable Kiwis to budget a little better.
“Today’s announcement will strain household budgets, especially those who are struggling to make ends meet,” he said.
“Kiwis need to work out what there wants are and what their needs are, but it can be done. I suggest printing off your last three months’ worth of bank statements, grab a ruler and pen and rule out what costs were not needed. I can guarantee you it will blow you away at how much unnecessary spending you have each month.”
Henry said the rise to the OCR sends a signal to Kiwis to connect with a mortgage adviser.
“Get involved with an adviser,” he said.
“We aren’t all built the same, but you will get a better service overall rather than dealing with a banker. Now more than ever people need to engage and check out what we can offer and experience for themselves what benefit we can bring because we deal with clients in real time.”
Henry’s advice to those concerned about today’s interest rate rise was to speak with a mortgage adviser early.
“If you know you are coming off a fixed rate soon then I suggest reaching out,” he said.
“Advisers can help provide a solution that best suits you and your circumstance. We can run calculations which can help clients prepare for future increases.”
“It is important to still enjoy a quality of life, so do not let your bank loan take over your ability to live comfortably. We help our clients maintain a balance of good wellbeing and a sense of living every day.”
