Lower OCR offers relief, encourages home buyer market confidence
Following its Wednesday meeting, New Zealand’s Reserve Bank reduced the OCR by 50 basis points to 3.75%, citing stable inflation and economic outlook – a move expected to ease borrowing costs and stimulate the housing market amid fluctuating property values.
Immediate relief for borrowers
Campbell Dunoon (pictured above left), head of network NZ at LJ Hooker, responded to RBNZ’s OCR cut.
The “decision will allow further relief for home loan borrowers and business,” Dunoon said. “New borrowers can now move forward with more confidence and existing borrowers will get further relief.”
This rate reduction comes as a boon amid concerns about mortgage rates and borrowing costs, which are now expected to stabilise, reducing significant fluctuations.
The recent Homeownership Aspiration Survey by LJ Hooker confirmed that mortgage rates are a major barrier for buyers, though property prices and stable income are more significant hurdles.
“The market senses that mortgage rates are stabilising and significant fluctuations in borrowing costs are unlikely,” Dunoon said.
Industry expectations and first-home buyer opportunities
Finsure Group, a leading trans-Tasman aggregation business, views the OCR cut as a significant opportunity for first-home buyers.
Jenny Campbell (pictured above centre), Finsure NZ country manager, remarked on the rate’s drop below 5% for the first time in years, predicting that “this rate cut ... gives first-home buyers an opportunity to get onto the property ladder.”
“Already we have seen lenders move in anticipation of a rate cut, with rates starting with a ‘4’ for the first time in years,” Campbell said.
Call for immediate action from banks
The financial industry advocates for banks to promptly pass on the rate cuts to both new and existing borrowers to maximise the benefits of RBNZ’s decision.
The Finance and Mortgage Advisers Association of New Zealand stressed the need for lenders to adjust quickly to support borrowers, especially those struggling with previous high rates.
Guidance for navigating new rates
As interest rates change, consumers face various decisions, including whether to fix rates for future stability.
Leigh Hodgetts (pictured above right), country manager at the FAMNZ, stressed the importance of consulting professionals.
“When rates are going down, it is important not to make these decisions without advice,” Hodgetts said.
Following up on the need for expert guidance, Campbell highlighted the expected increase in demand for financial advisers’ services as lenders adjust to the new cash rate.
“Advisers who have waited passively for the rate cut rather than proactively contacting their clients might lag as the market picks up,” she said. “If you haven’t already, now is the time to reach out to your clients to ensure they are securing the best possible deals.”
