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), tipping us into a falling rate environment.
The move marked 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.
But in light of all the weak economic we've seen in recent months, coupled with the fact that inflation looks like it's finally back in its box, the RBNZ was ultimately forced to bring that date forward.
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?
According to the RBNZ's forecast, we can expect to see two further OCR reductions before the end of 2024.
That will then be followed by a series of cuts over the course of next year, totalling 1%, and our expectation is that most of that will be front-loaded into the first half of the year.
The RBNZ has said that a "neutral" OCR—one which neither stimulates nor suppresses the economy—is around 3%, meaning mortgage rates should ultimately 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
- 9th October – Monetary Policy Review & OCR
- 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.