FAMNZ predicts a late Christmas gift for mortgage holders in February
New Zealand homeowners are holding out hope for a long-overdue financial reprieve, with the Reserve Bank (RBNZ) expected to cut interest rates at its next meeting in February.
According to the Finance and Mortgage Advisers Association of New Zealand (FAMNZ), this could offer struggling households some much-needed relief after months of battling high mortgage repayments.
FAMNZ country manager Leigh Hodgetts (pictured above) acknowledged the difficult circumstances for many Kiwis this Christmas, noting that financial pressures are forcing households to rein in spending.
“Christmas is a time when consumers often spend too much, but this year many will be cutting back due to the pressures from high interest rates,” Hodgetts said.
She added that a predicted 50-basis-point rate cut on Feb. 19 could bring significant relief to mortgage holders.
A long-awaited gift for borrowers
Hodgetts highlighted that the anticipated rate reduction would mark the fourth consecutive cut and could make mortgage repayments far more manageable for homeowners. RBNZ has already signalled the potential for further cuts into early 2025, aiming to reach a neutral OCR of around 3% by mid-2026.
“If this happens, the reduction is expected to influence shorter-term mortgage rates, which are already trending down,” she said.
However, she warned that banks might not pass on the full rate cut to customers.
“Banks have a habit of passing on rate increases immediately and in full, but they don’t always act this way when rates fall,” Hodgetts said. “If this happens, there will be some consumers seeking a better deal elsewhere.”
Boost for buyers and the economy
Lower rates could prove particularly beneficial for borrowers on floating rates and those renewing fixed-term mortgages in 2025. Hodgetts also pointed out that cheaper mortgages could stabilise property prices, sparking renewed interest from first-home buyers and property investors alike.
“Lower rates could also help property prices stabilise further and this will encourage activity from first-home buyers and investors,” she said. “It will certainly be positive for consumers and the overall economy, so let’s hope Santa comes late and we can extend the festive season to February.”
While Christmas spending may take a hit this year, homeowners remain hopeful that a February rate cut will deliver the financial relief they need – even if the gift comes eight weeks late.
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