In: Real News

This time, the Reserve Bank didn’t take economists by surprise as it announced that the official cash rate (OCR) would remain unchanged at 1 per cent. To quote ASB chief economist Nick Tuffley, a lower OCR “remains very much on the cards,” with some analysts forecasting further cuts in November 2019, February and May 2020. If true, this would take the OCR to 0.25%.

But despite the current low rates, and the expectation that they will remain low for the foreseeable future, borrowers may still face upward pressure on mortgage rates.

It’s not yet clear, for example, how the Reserve Bank’s capital proposals to increase banks’ regulatory capital requirements will affect mortgage rates. According to ANZ economists, lending rates might increase by 45-75 basis points in the transition period and by 20-120 basis points in the long run. The same economists also believe that a deterioration in global financial markets could increase the cost of wholesale funding, which would in turn force NZ rates to rise.

How will all this impact the property market? It’s not easy to tell, but some lenders expect house price growth to return in 2020. Exactly how strong is a matter of debate, and an interesting one too.


To get in touch with the team at Mortgage Link, please contact:
Josh Bronkhorst
[email protected]
021 835 506


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