On 14th August 2024—three years (almost to the day) since the latest cycle of rate hikes began—the Reserve Bank (RBNZ) pushed through a 0.25% cut to the Official Cash Rate (OCR), marking the start of the long-awaited easing cycle.
The move represented a pretty significant turnaround for the RBNZ, which, up until that point, had been adamant that it would continue to hold the OCR at 5.5% until sometime in 2025.
It's good news for borrowers who have been hit hard by increased mortgage costs over the last few years: relief is finally on the way.
How far and how fast are rates likely to fall?
Now that interest rates are on the way down again, the expectation is that they should fall relatively quickly.
With inflation back under control, and the economy in undeniably rough shape, the priority is to get us back to a 'neutral' OCR—one which neither stimulates nor restricts the economy—as quickly as possible.
The RBNZ has said that, moving forward, a "neutral" level is around 3%, meaning mortgage rates should ultimately drop back and settle somewhere between 4.5% and 5%.
So, now that falling rates are here, these are the key OCR dates to watch for in 2024 and 2025*:
2024
- 27th November – Monetary Policy Statement & OCR
2025
- 19th February - Monetary Policy Statement & OCR
- 9th April - Monetary Policy Review & OCR
- 28th May - Monetary Policy Statement & OCR
- 9th July - Monetary Policy Review & OCR
- 20th August - Monetary Policy Statement & OCR
- 8th October - Monetary Policy Review & OCR
- 26th November - Monetary Policy Statement & OCR
Whatever the next few months might bring, you can always catch our latest analysis on the situation over on the Squirrel blog, helping to make sense of what the RBNZ announcements mean for Kiwi homeowners and our housing market.
Need help making sense of interest rates?
We have a team of mortgage and property experts ready to help. Give us a call on 0800 21 22 30 or flick us a message here.
*There are two types of OCR announcement. Quarterly Monetary Policy Statements (in bold) are more in-depth – and may be where the RBNZ revises its forecasts. Monetary Policy Reviews are more of an interim update, or check-in, between MPS announcements.